RD Instruction 4274-D

Table of Contents

**PART 4274 - DIRECT AND INSURED LOANMAKING**

**Subpart D - Intermediary Relending Program (IRP)**

## **[TABLE OF CONTENTS]{.underline}**

**[Sec]{.underline}. [Page]{.underline}**

**4274.301 Introduction. 1**

**4274.302 Definitions and abbreviations. 2**

**(a) General definitions. 2**

**(b) Abbreviations. 4**

**4274.303 \[Reserved\] 4**

*4274.304 Loans made prior to effective date of regulations**.** 4*

**4274.305 - 4274.306 \[Reserved\] 4A**

**4274.307 Eligibility requirements - Intermediary. 4A**

**4274.308 Eligibility requirements - Ultimate recipients. 6**

**4274.309 - 4274.312 \[Reserved\] 7**

*4274.313 Administrative responsibility. 7*

**4274.314 Loan purposes. 7**

**(a) Intermediaries. 7**

**(b) Ultimate recipients. 7**

**4274.315 - 4274.318 \[Reserved\] 9**

**4274.319 Ineligible loan purposes. 10**

**4274.320 Loan terms. 11**

**4274.321 - 4274.324 \[Reserved\] 11**

**4274.325 Interest rates. 11**

**4274.326 Security. 11**

**(a) Intermediaries. 11**

**(b) Ultimate recipients. 12**

**4274.327 - 4274.330 \[Reserved\] 12A**

**4274.331 Loan limits. 12A**

**(a) Intermediary. 12A**

**(b) Ultimate recipients. 13**

**(c) Portfolio. 13**

**4274.332 Post award requirements. 14**

**(a) Applicability. 14**

**(b) Maintenance of IRP revolving fund. 14**

(08-19-05) SPECIAL PN

RD Instruction 4274-D

Table of Contents

Page 2

**[Sec]{.underline}. [Page]{.underline}**

**4274.333 - 4274.336 \[Reserved\] 15**

**4274.337 Other regulatory requirements. 15**

**(a) Intergovernmental consultation. 15**

**(b) Environmental requirements. 16**

**(c) Equal opportunity and nondiscrimination 17**

**requirements.**

> **(d) Seismic safety of new building construction. 18**

**4274.338 Loan Agreements between the Agency and the intermediary. 18**

**4274.339 - 4274.342 \[Reserved\] 25**

**4274.343 Application. 25**

**4274.344 Filing and processing applications for loans. 28**

**(a) Intermediaries\' contact. 28**

**(b) Filing applications. 29**

**(c) Loan priorities. 29**

**4274.345 - 4274.348 \[Reserved\] 33**

**4274.349 Agency evaluation of application. 33**

**4274.350 Letter of conditions. 33**

**4274.351 - 4274.354 \[Reserved\] 34**

**4274.355 Loan approval and obligating funds. 35**

**4274.356 Loan closing. 36**

**4274.357 - 4274.360 \[Reserved\] 37**

**4274.361 Requests to make loans to ultimate recipients. 37**

**4274.362 - 4274.372 \[Reserved\] 39**

**4274.373 Appeals. 39**

**4274.374 - 4274.380 \[Reserved\] 39**

**4274.381 Exception authority. 40**

**4274.382 Exhibits. 40**

**4274.383 - 4274.399 \[Reserved\] 40**

**4274.400 OMB control number. 40**

*Exhibit A - Checklist - Intermediary Relending Program Loan to
Intermediary.*

*Exhibit B - Checklist - Intermediary Relending Program Loan to
Ultimate\
Recipient.*

*Exhibit C - Priority Scoresheet.*

*Exhibit D - Sample Loan Agreement Amendment.*

## oOo 

RD Instruction 4274-D

PART 4274 - DIRECT AND INSURED LOANMAKING

**Subpart D - Intermediary Relending Program (IRP)**

**§ 4274.301 [Introduction]{.underline}.**

**(a) This subpart contains regulations for loans made by the Agency to
eligible intermediaries and applies to borrowers and other parties
involved in making such loans. The provisions of this subpart supersede
conflicting provisions of any other subpart. The servicing and
liquidation of such loans will be in accordance with part 1951,\
subpart R, of this title.**

**(b) The purpose of the program is to alleviate poverty and increase
economic activity and employment in rural communities, especially
disadvantaged and remote communities, through financing targeted
primarily towards smaller and emerging businesses, in partnership with
other public and private resources, and in accordance with State and
regional strategy based on identified community needs. This purpose is
achieved through loans made to intermediaries that establish programs
for the purpose of providing loans to ultimate recipients for business
facilities and community developments in a rural area.**

**(c) Proposed intermediaries are required to identify any known
relationship or association with a United States Department of**

**Agriculture (USDA) Rural Development employee. Any processing or
servicing activity conducted pursuant to this subpart involving
authorized assistance to USDA Rural Development employees, members of
their families, close relatives, or business or close personal
associates, is subject to the provisions of subpart D of part 1900 of
this chapter. (Revised 09-22-04, PN 379.)**

**(d) Copies of all forms, regulations, and Agency procedures referenced
in this subpart are available in the National Office or any Rural
Development State Office.** *Any portion of this Instruction appearing
in italicized type is considered by the Agency to be administrative
procedure and has not been published in the Federal Register as part of
the regulation*.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

DISTRIBUTION: WSAL Loan and Grant Making

Rural Development

## 1

## (Revision 1)

(02-06-98) SPECIAL PN

RD Instruction 4274-D

**§ 4274.302 [Definitions and abbreviations]{.underline}.**

**(a) [General definitions]{.underline}. The following definitions are
applicable to the terms used in this subpart:**

**[Agency]{.underline}. The Federal agency within the USDA with
responsibility assigned by the Secretary of Agriculture to administer
IRP. At the time of publication of this rule, that Agency was the Rural
Business-Cooperative Service (RBS).**

**[Agency IRP loan funds]{.underline}. Cash proceeds of a loan obtained
from the Agency through IRP, including the portion of an IRP revolving
fund directly provided by the Agency IRP loan. Agency IRP loan funds are
Federal funds.**

**[Agricultural production or agriculture production]{.underline}. The
cultivation, production, growing, raising, feeding, housing, breeding,
hatching, or managing of crops, plants, animals, or birds, either for
fiber, food for human consumption, or livestock feed.**

**[Initial Agency IRP loan]{.underline}. The first IRP loan made by the
Agency to an intermediary.**

**[Intermediary]{.underline}. The entity requesting or receiving Agency
IRP loan funds for establishing a revolving fund and relending to
ultimate recipients.**

**[IRP revolving fund]{.underline}. A group of assets, obtained through
or related to an Agency IRP loan and recorded by the intermediary in a
bookkeeping account or set of accounts and accounted for, along with
related liabilities, revenues, and expenses, as an entity or enterprise
separate from the intermediary\'s other assets and financial
activities.**

**[Principals of intermediary]{.underline}. Members, officers,
directors, and other individuals or entities directly involved in the
operation and management (including setting policy) of an
intermediary.**

**[Processing office or officer]{.underline}. The processing office for
an IRP application is the office within the Agency administrative
organization with assigned authority and responsibility to process the
application. The processing office is the primary contact for the
proposed intermediary and maintains the official application case file.
The processing officer for an application is the person in charge of the
processing office. The processing officer is responsible for ensuring
that all regulations and Agency procedures are complied with in regard
to applications under the office's jurisdiction.**

## 2

## (Revision 1) 

RD Instruction 4274-D

§ 4274.302(a) (Con.)

**[Revolved funds]{.underline}. The cash portion of an IRP revolving
fund that is not composed of Agency loan funds, including funds that are
repayments of Agency IRP loans and including fees and interest collected
on such loans. Revolved funds shall not be considered Federal funds.**

**[Rural area]{.underline}. All territory of a State that is not within
the outer boundary of any city having a population of 25,000 or more,
according to the latest decennial census.**

**[Servicing office or officer]{.underline}. The servicing office for an
IRP loan is the office within the Agency administrative organization
with assigned authority and responsibility to service the loan. The
servicing office is the primary contact for the borrower and maintains
the official case file after the loan is closed. The servicing officer
for a loan is the person in charge of the servicing office. The
servicing officer is responsible for ensuring that all regulations and
Agency procedures are complied with in regard to loans under the
office's jurisdiction.**

**[State]{.underline}. Any of the 50 States, the District of Columbia,
the Commonwealth of Puerto Rico, the Virgin Islands of the United
States, Guam, American Samoa, the Commonwealth of the Northern Mariana
Islands, the Republic of Palau, the Federated States of Micronesia, and
the Republic of the Marshall Islands.**

**[Subsequent IRP loan]{.underline}. An IRP loan from the Agency to an
intermediary that has received one or more IRP loans previously.**

**[Technical assistance]{.underline}. A function performed for the
benefit of an ultimate recipient or proposed ultimate recipient, which
is a problem solving activity. The Agency will determine whether a
specific activity qualifies as technical assistance.**

**[Ultimate recipient]{.underline}. An entity or individual that
receives a loan from an intermediary\'s IRP revolving fund.**

**[Underrepresented group]{.underline}. U.S. citizens with identifiable
common characteristics, that have not received IRP assistance or have
received a lower percentage of total IRP dollars than the percentage
they represent of the general population.** *The Agency inteprets
identifiable common characteristics to include, but are not limited to,
minorities, elderly, persons with disabilities, women, etc. (Revised
08-19-05, SPECIAL PN.)*

## 3

## (Revision 3)

(02-06-98) SPECIAL PN

RD Instruction 4274-D

§ 4274.302(a) (Con.)

**[United States]{.underline}. The 50 States of the United States of
America, the District of Columbia, the Commonwealth of Puerto Rico, the
Virgin Islands of the United States, Guam, American Samoa, the
Commonwealth of the Northern Mariana Islands, the Republic of Palau, the
Federated States of Micronesia, and the Republic of the Marshall
Islands.**

**(b) [Abbreviations]{.underline}. The following are applicable to this
subpart:**

**[B&I]{.underline} - Business and Industry**

**[IRP]{.underline} - Intermediary Relending Program**

**[OGC]{.underline} - Office of the General Counsel**

**[OIG]{.underline} - Office of Inspector General**

**[OMB]{.underline} - Office of Management and Budget**

**[RBS]{.underline} - Rural Business-Cooperative Service, or any
successor agency**

**[RDLF]{.underline} - Rural Development Loan Fund**

**[USDA]{.underline} - United States Department of Agriculture**

**§ 4274.303 \[Reserved\]**

*§ 4274.304 [Loans made prior to effective date of
regulations]{.underline}.*

*(Added 08-05-98, PN 294.)*

*For loans closed before February 6, 1998, the loan agreement executed
at loan closing will be interpreted in accordance with the IRP
regulations in effect when the loan was closed. Exceptions will be
allowed as follows:*

*(a) An intermediary may agree, by amendment to the loan agreement, to
have its loan serviced under new regulations effective on February 6,
1998. The intermediary must accept the entire revised regulation. It may
not pick portions of one regulation and portions of another. Exhibit D
provides standard language that may be used to amend loan agreements to
bring old loans under new regulations. All intermediaries with loans
closed prior to February 6, 1998 should be offered the opportunity and
encouraged to amend their loan agreements to bring the loans under the
regulations that became effective on February 6, 1998.*

## 4

## (Revision 3) 

RD Instruction 4274-D

§ 4274.304 (Con.)

*(b*) *If an intermediary's loan agreement requires assignment of
promissory notes and collateral documents to the Agency, the servicing
officer may return to the intermediary all original promissory notes and
assignment documents held by the Agency and stop obtaining such
documents for future loans to ultimate recipients, provided:*

*(1) the repayment status of the intermediary's loan is current;*

*(2) the intermediary is in compliance with the loan agreement and work
plan for the intermediary's loan; and*

*(3) the intermediary officials are doing an adequate job of servicing
their loans.*

**§§ 4274.305 - 4274.306 \[Reserved\]**

**§ 4274.307 [Eligibility requirements - Intermediary]{.underline}.**

**(a) The types of entities which may become intermediaries are:**

**(1) Private nonprofit corporations.**

**(2) Public agencies - Any State or local government, or any branch or
agency of such government having authority to act on behalf of that
government, borrow funds, and engage in activities eligible for funding
under this subpart.** *If the Intermediary is a State Agency, at the
time of submission of an application, a thorough review of the
Organization\'s Articles of Incorporation and Bylaws and our legal
documents should be completed to avoid possible conflicting problems.*
(Revised 08-19-05, SPECIAL PN.)

**(3) Indian groups - Indian tribes on a Federal or State reservation or
other federally recognized tribal groups.**

**(4) Cooperatives - Incorporated associations, at least 51 percent of
whose members are rural residents, whose members have one vote each, and
which conduct, for the mutual benefit of their members, such operations
as producing, purchasing, marketing, processing, or other activities
aimed at improving the income of their members as producers or their
purchasing power as consumers.**

## 4A

## (Revision 1)

(02-06-98) SPECIAL PN

RD Instruction 4274-D

§ 4274.304 (Con.)

*(b*) *If an intermediary's loan agreement requires assignment of*

*promissory notes and collateral documents to the Agency, the servicing
officer may return to the intermediary all original promissory notes and
assignment documents held by the Agency and stop obtaining such
documents for future loans to ultimate recipients, provided:*

*(1) the repayment status of the intermediary's loan is current;*

*(2) the intermediary is in compliance with the loan agreement and work
plan for the intermediary's loan; and*

*(3) the intermediary officials are doing an adequate job of servicing
their loans.*

**§§ 4274.305 - 4274.306 \[Reserved\]**

**§ 4274.307 [Eligibility requirements - Intermediary]{.underline}.**

**(a) The types of entities which may become intermediaries are:**

**(1) Private nonprofit corporations.**

**(2) Public agencies - Any State or local government, or any branch or
agency of such government having authority to act on behalf of that
government, borrow funds, and engage in activities eligible for funding
under this subpart.**

**(3) Indian groups - Indian tribes on a Federal or State reservation or
other federally recognized tribal groups.**

**(4) Cooperatives - Incorporated associations, at least 51 percent of
whose members are rural residents, whose members have one vote each, and
which conduct, for the mutual benefit of their members, such operations
as producing, purchasing, marketing, processing, or other activities
aimed at improving the income of their members as producers or their
purchasing power as consumers.**

## 4A

## (Added 08-05-98, PN 294)

(02-06-98) SPECIAL PN

RD Instruction 4274-D

§ 4274.307 (Con.)

**(b) The intermediary must:**

**(1) Have the legal authority necessary for carrying out the proposed
loan purposes and for obtaining, giving security for, and repaying the
proposed loan.**

**(2) Have a proven record of successfully assisting rural business and
industry, or, for intermediaries that propose to finance community
development, a proven record of successfully assisting** **rural
community development projects of the type planned.**

**(i) Except as provided in paragraph (b)(2)(ii) of this section, such
record will include recent experience in loan making and servicing with
loans that are similar in nature to those proposed for the IRP and a
delinquency and loss rate acceptable to the Agency.**

**(ii) The Agency may approve an exception to the requirement for loan
making and servicing experience provided:**

**(A) The proposed intermediary has a proven record of successfully
assisting (other than through lending) rural business and industry or
rural community development projects of the type planned; and**

**(B) The proposed intermediary will, before the loan is closed, bring
individuals with loan making and servicing experience and expertise into
the operation of the IRP revolving fund.**

**(3) Have the services of a staff with loan making and servicing
expertise acceptable to the Agency.**

**(4) Have capitalization acceptable to the Agency.**

**(c) No loans will be extended to an intermediary unless:**

**(1) There is adequate assurance of repayment of the loan based on the
fiscal and managerial capabilities of the proposed** **intermediary.**

**(2) The loan is not otherwise available on reasonable
([i.e]{.underline}., usual and customary) rates and terms from private
sources or other Federal, State, or local programs.**

**(3) The amount of the loan, together with other funds available, is
adequate to assure completion of the project or achieve the purposes for
which the loan is made.**

## 5

## 

(02-06-98) SPECIAL PN

RD Instruction 4274-D

§ 4274.307 (Con.)

**(d) At least 51 percent of the outstanding interest or membership in
any nonpublic body intermediary must be composed of citizens of the
United States or individuals who reside in the United States after being
legally admitted for permanent residence.**

**(e)** **Any delinquent debt to the Federal Government by the
intermediary or any principal of the intermediary shall cause the
Intermediary to be ineligible to receive any IRP loan. Agency loan funds
may not be used to satisfy the debt.**

**§ 4274.308 [Eligibility requirements - Ultimate
recipients]{.underline}.**

**(a) Ultimate recipients may be individuals, public or private
organizations, or other legal entities, with authority to incur the debt
and carry out the purpose of the loan.**

**(b) To be eligible to receive loans from the IRP revolving loan fund,
ultimate recipients;**

**(1) Must be citizens of the United States or reside in the United
States after being legally admitted for permanent residence. In the case
of an organization, at least 51 percent of the outstanding membership or
ownership must be either citizens of the United States or residents of
the United States after being legally admitted for permanent
residence.**

**(2) Must be located in a rural area of a State.**

**(3) Must be unable to finance the proposed project from its own
resources or through commercial credit or other Federal, State, or local
programs at reasonable rates and terms.**

**(4) Must, along with its principal officers (including their immediate
family) hold no legal or financial interest or influence in the
intermediary. Also, the intermediary and its principal officers
(including immediate family) must hold no legal or financial interest or
influence in the ultimate recipient. However, this paragraph shall not
prevent an intermediary that is organized as a cooperative from making a
loan to one of its members.**

**(c) Any delinquent debt to the Federal Government, by the ultimate
recipient or any of its principals, shall cause the proposed ultimate
recipient to be ineligible to receive a loan from Agency IRP loan funds.
Agency IRP loan funds may not be used to satisfy the delinquency.**

## 6

##  

RD Instruction 4274-D

**§§ 4274.309 - 4274.312 \[Reserved\]**

*§ 4274.313 [Administrative responsibility]{.underline}.*

*(a) Except as provided in this section, the processing and servicing
office for an IRP application or loan is the State Office for the State
where the intermediary\'s headquarters is located.*

*(b) State Directors may delegate in writing processing and servicing
office responsibility to District Offices, provided that the State
Director determines the District Office staff has had adequate training
on the IRP.*

*(c) The processing and servicing office for intermediaries
headquartered in the District of Columbia is the National Office.*

**§ 4274.314 [Loan purposes]{.underline}.**

**(a) [Intermediaries]{.underline}. Agency IRP loan funds must be placed
in the intermediary\'s IRP revolving fund and used by the intermediary
to provide direct loans to eligible ultimate recipients.**

**(b) [Ultimate recipients]{.underline}. Loans from the intermediary to
the ultimate recipient using the IRP revolving fund must be for
community development projects, the establishment of new businesses,
expansion of existing businesses, creation of employment opportunities,
or saving existing jobs. Such loans may include, but are not limited
to:**

**(1) Business and industrial acquisitions when the loan will keep the
business from closing, prevent the loss of employment opportunities, or
provide expanded job opportunities.**

**(2) Business construction, conversion, enlargement, repair,
modernization, or development.**

**(3) Purchase and development of land, easements, rights-of-way,
buildings, facilities, leases, or materials.**

**(4) Purchase of equipment, leasehold improvements, machinery, or
supplies.**

**(5) Pollution control and abatement.**

**(6) Transportation services.**

## 7

## 

(02-06-98) SPECIAL PN

RD Instruction 4274-D

§ 4274.314(b) (Con.)

**(7) Start-up operating costs and working capital.**

**(8) Interest (including interest on interim financing) during the
period before the facility becomes income producing, but not to exceed 3
years.**

**(9) Feasibility studies.**

**(10) Debt refinancing.**

**(i) A complete review will be made by the intermediary to determine
whether the loan will restructure debts on a schedule that will allow
the ultimate recipient to operate successfully and pay off the loan
rather than merely take over an unsound loan. The intermediary will
obtain the proposed ultimate recipient\'s complete debt schedule which
should agree with the proposed ultimate recipient\'s latest balance
sheet; and**

**(ii) Refinancing debts may be allowed only when it is determined by
the intermediary that the project is viable and refinancing is necessary
to create new or save existing jobs or create or continue a needed
service; and**

**(iii) On any request for refinancing of existing secured loans, the
intermediary is required, at a minimum, to obtain the previously held
collateral as security for the loans and must not pay off a creditor in
excess of the value of the collateral. Additional collateral will be
required when the refinancing of unsecured loans is unavoidable to
accomplish the necessary strengthening of the ultimate recipient\'s
position.**

**(11) Reasonable fees and charges only as specifically listed in this
paragraph. Authorized fees include loan packaging fees, environmental
data collection fees, management consultant fees, and other fees for
services rendered by professionals. Professionals are generally persons
licensed by States or accreditation associations, such as engineers,
architects, lawyers, accountants, and appraisers. The maximum amount of
fee will be what is reasonable and customary in the community or region
where the project is located. Any such fees are to be fully documented
and justified.**

**(12) Hotels, motels, tourist homes, bed and breakfast establishments,
convention centers, and other tourist and recreational facilities except
as prohibited by § 4274.319.**

## 8

##  

RD Instruction 4274-D

§ 4274.314(b) (Con.)

**(13) Educational institutions.**

**(14) Revolving lines of credit: [Provided]{.underline},**

**(i) The portion of the intermediary\'s total IRP revolving fund that
is committed to or in use for revolving lines of credit will not exceed
25 percent at any time;**

**(ii) All ultimate recipients receiving revolving lines of credit will
be required to reduce the outstanding balance of the revolving line of
credit to zero at least one time each year;**

**(iii) All revolving lines of credit will be approved by the
intermediary for a specific maximum amount and for a specific maximum
time period, not to exceed 2 years;**

**(iv) The intermediary will provide a detailed description, which will
be incorporated into the intermediary\'s work plan and be subject to
Agency approval, of how the revolving lines of credit will be operated
and managed. The description will include evidence that the intermediary
has an adequate system for:**

**(A) Interest calculations on varying balances, and**

**(B) Monitoring and control of the ultimate recipients\' cash,
inventory, and accounts receivable; and**

**(v) If, at any time, the Agency determines that an intermediary\'s
operation of revolving lines of credit is causing excessive risk of loss
for the intermediary or the Government, the Agency may terminate the
intermediary\'s authority to use the IRP revolving fund for revolving
lines of credit. Such termination will be by written notice and will
prevent the intermediary from approving any new lines of credit** **or
extending any existing revolving lines of credit beyond the effective
date of termination contained in the notice.**

**§§ 4274.315 - 4274.318 \[Reserved\]**

## 9

## 

(02-06-98) SPECIAL PN

RD Instruction 4274-D

**§ 4274.319 [Ineligible loan purposes]{.underline}.**

**Agency IRP loan funds may not be used for payment of the
intermediary\'s administrative costs or expenses. The IRP revolving fund
may not be used for:**

**(a) Assistance in excess of what is needed to accomplish the purpose
of the ultimate recipient\'s project.**

**(b) Distribution or payment to the owner, partners, shareholders, or
beneficiaries of the ultimate recipient or members of their families
when such persons will retain any portion of their equity in the
ultimate recipient.**

**(c) Charitable institutions that would not have revenue from sales or
fees to support the operation and repay the loan, churches,
organizations affiliated with or sponsored by churches, and fraternal
organizations.**

**(d) Assistance to government employees, military personnel, or
principals or employees of the intermediary or organizations for which
such persons are directors or officers or in which they have ownership
of 20 percent or more.**

**(e) A loan to an ultimate recipient which has an application pending
with or a loan outstanding from another intermediary involving an IRP
revolving fund if the total IRP loans would exceed the limits
established in** § **4274.331(b).**

**(f) Agricultural production.**

**(g) The transfer of ownership unless the loan will keep the business
from closing, or prevent the loss of employment opportunities in the
area, or provide expanded job opportunities.**

**(h) Community antenna television services or facilities.**

**(i) Any illegal activity.**

**(j) Any project that is in violation of either a Federal, State, or
local environmental protection law or regulation or an enforceable land
use restriction unless the assistance given will result in curing or
removing the violation.**

**(k) Lending and investment institutions and insurance companies.**

**(l) Golf courses, race tracks, or gambling facilities.**

## 10

##  

## RD Instruction 4274-D

**§ 4274.320 [Loan terms]{.underline}.**

**(a) No loan to an intermediary shall be extended for a period
exceeding 30 years. Interest and principal payments will be scheduled at
least annually. The initial principal payment may be deferred (during
the period before the facility becomes income producing) by the Agency,
but not more than 3 years.** *The term of any loan made by the Agency to
an intermediary shall not exceed 30 years from the date of the original
promissory note. In the event of any changes to the original loan
agreement (i.e., restructuring of debt, restructuring of payments,
change in debtor, and so forth) the maturity date of the loan shall not
be extended beyond 30 years from the original Note date. Similarly, the
deferment period of any loan made by the Agency to an intermediary shall
not exceed three years. Therefore, in the event of any changes to the
original loan agreement as above, there shall be no deferral of
principal after the third anniversary of the original Note date.*

**(Revised 12-07-05, PN 392.)**

**(b) Loans made by an intermediary to an ultimate recipient from the
IRP revolving fund will be scheduled for repayment over a term
negotiated by the intermediary and ultimate recipient. The term must be
reasonable and prudent considering the purpose of the loan, expected
repayment** **ability of the ultimate recipient, and the useful life of
collateral, and must be within any limits established by the
intermediary\'s work plan.**

**§§ 4274.321 - 4274.324 \[Reserved\]**

**§ 4274.325 [Interest rates]{.underline}.**

**(a) Loans made by the Agency pursuant to this subpart shall bear
interest at a fixed rate of 1 percent per annum over the term of the
loan.**

**(b) Interest rates charged by intermediaries to ultimate recipients on
loans from the IRP revolving fund shall be negotiated by the
intermediary and ultimate recipient. The rate must be within limits
established by the intermediary\'s work plan approved by the Agency. The
rate should normally be the lowest rate sufficient to cover the loan\'s
proportional share of the IRP revolving fund\'s debt service costs,
reserve for bad debts, and administrative costs.**

## 11

## (Revision 2)

(02-06-98) SPECIAL PN

RD Instruction 4274-D

**§ 4274.326 [Security]{.underline}.**

**(a) [Intermediaries]{.underline}. Security for all loans to
intermediaries must be such that the repayment of the loan is reasonably
assured, when considered along with the intermediary\'s financial
condition, work plan, and management ability. It is the responsibility
of the intermediary to make loans to ultimate recipients in such a
manner that will fully protect the interests of the intermediary and the
Government.**

**(1) Security for such loans may include, but is not limited to:**

**(i) Any realty, personalty, or intangible capable of being mortgaged,
pledged, or otherwise encumbered by the intermediary in favor of the
Agency; and**

**(ii) Any realty, personalty, or intangible capable of being mortgaged,
pledged, or otherwise encumbered by an ultimate recipient in favor of
the Agency.**

(2) **Initial security will consist of a pledge by the intermediary of
    all assets now in or hereafter placed in the IRP revolving fund,
    including cash and investments, notes receivable from ultimate
    recipients, and the intermediary\'s security interest in collateral
    pledged by ultimate recipients. Except for good cause shown, The
    Agency will not obtain assignments of specific assets at the time a
    loan is made to an intermediary or ultimate recipient. The
    intermediary will covenant that, in the event the intermediary's
    financial condition deteriorates or the intermediary takes action
    detrimental to prudent fund operation or fails to take action
    required of a prudent lender, the intermediary will provide
    additional security, execute any additional documents, and undertake
    any reasonable acts the Agency may request to protect the Agency's
    interest or to perfect a security interest in any asset, including
    physical delivery of assets and specific assignments to the
    Agency.** **All debt instruments and collateral documents used by an
    intermediary in connection with loans to ultimate recipients must be
    assignable.**

**(3) In addition to normal security documents, a first lien interest in
the intermediary's revolving fund account will be accomplished by a
control agreement satisfactory to RBS. The control agreement does not
have to require RBS signature for withdrawals. The depository bank shall
waive its offset and recoupment rights against the depository account to
RBS and subordinate any liens it may have against the IRP depository
bank account. The use of Form RD 402-1, "Deposit Agreement," or similar
form developed by the State Regional Office of the General Counsel are
acceptable.** (Added 08-19-05, SPECIAL PN.)

## 12

(Revision 2)

RD Instruction 4274-D

§ 4274.326(a) (Con.)

**(b) [ultimate recipients]{.underline}. Security for a loan from an
intermediary\'s IRP revolving fund to an ultimate recipient will be
negotiated between the intermediary and ultimate recipient, within the
general security policies established by the intermediary and approved
by the Agency.**

**§§ 4274.327 -- 4274.330 \[Reserved\]**

**§ 4274.331 [Loan limits]{.underline}.**

**(a) [Intermediary]{.underline}.**

**(1) No loan to an intermediary will exceed the maximum amount the
intermediary can reasonably be expected to lend to eligible ultimate
recipients, in an effective and sound manner, within 1 year after loan
closing.**

**(2) The initial Agency IRP loan as defined in § 4274.302(a) will**

**not exceed \$2 million.**

## 12A

## (Revision 1)

## (02-06-98) SPECIAL PN 

> RD Instruction 4274-D

§ 4274.331(a) (Con.)

**(3) Intermediaries that have received one or more IRP loans may**

**apply for and be considered for subsequent IRP loans provided:**

**(i) At least 80 percent of each of an intermediary's IRP loans, except
those earmarked for special purposes, must have been disbursed to
eligible ultimate recipients or the subsequent loan will serve a
geographic area not included in an area currently served.** (Revised
08-19-05, SPECIAL PN.)

**(ii) The intermediary is promptly relending all collections from loans
made from its IRP revolving fund in excess of what is needed for
required debt service, reasonable administrative costs approved by the
Agency, and a reasonable reserve for debt service and uncollectible
accounts;**

**(iii) The outstanding loans of the intermediary\'s IRP revolving fund
are generally sound; and**

**(iv) The intermediary is in compliance with all applicable regulations
and its loan agreements with the Agency.**

**(4) Subsequent loans will not exceed \$1 million each and not more
than one loan will be approved by the Agency for an intermediary in any
single fiscal year unless the request is from an IRP earmark.**

(Revised 08-19-05, SPECIAL PN.)

**(5) Total outstanding IRP indebtedness of an intermediary to the
Agency will not exceed \$15 million at any time.**

**(b) [Ultimate recipients]{.underline}. Loans from intermediaries to
ultimate recipients using the IRP revolving fund must not exceed the
lesser of:**

**(1) \$250,000; or**

1.  

```{=html}
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```
(2) **Seventy five percent of the total cost of the ultimate**

> **recipient\'s project for which the loan is being made.**

**(c) [Portfolio]{.underline}. No more than 25 percent of an IRP loan
approved may be used for loans to ultimate recipients that exceed
\$150,000. This limit does not apply to revolved funds. § 4274.332 [Post
award requirements]{.underline}.**

> 13
>
> (Revision 2)

## (02-06-98) SPECIAL PN 

RD Instruction 4274-D

**§ 4274.332 [Post award requirements]{.underline}.**

**(a) [Applicability]{.underline}. Intermediaries receiving loans under
this program shall be governed by these regulations, the loan agreement,
the approved work plan, security interests, and any other conditions
which the Agency**

**requirement on loans made from the \"IRP revolving fund,\" such
requirement shall apply to all loans made by an intermediary to an
ultimate recipient from the intermediary\'s IRP revolving fund for as
long as any portion of the intermediary\'s IRP loan from the Agency
remains unpaid. Whenever this subpart imposes a requirement on loans
made by intermediaries from \"Agency IRP loan funds,\" without specific
reference to the IRP revolving fund, such requirement shall apply only
to loans made by an intermediary using Agency IRP loan funds, and will
not apply to loans made from revolved funds.**

**(b) [Maintenance of IRP revolving fund]{.underline}. For as long as
any part of an IRP loan to an intermediary remains unpaid, the
intermediary must maintain the IRP revolving fund. All Agency IRP loan
funds received by an intermediary must be deposited into an IRP
revolving fund. The intermediary may transfer additional assets into the
IRP revolving fund. All cash of the IRP revolving fund shall be
deposited in a separate bank account or accounts. No other funds of the
intermediary will be commingled with such money. All moneys deposited in
such bank account or accounts shall be money of the IRP revolving fund.
Loans to ultimate recipients are advanced from the IRP revolving fund.
The receivables created by making loans to ultimate recipients, the
intermediary\'s security interest in collateral pledged by ultimate
recipients, collections on the receivables, interest, fees, and any
other income or assets derived from the operation of the IRP revolving
fund are a part of the IRP revolving fund.**

**(1) The portion of the IRP revolving loan fund that consists of Agency
IRP loan funds, on a last-in-first-out basis, may only be used for
making loans in accordance with § 4274.314 of this subpart. The portion
of the IRP revolving fund which consists of revolved funds may be used
for debt service, reasonable administrative costs, or reserves in
accordance with this section, or for making additional loans.**

**(2) The intermediary must submit an annual budget of proposed
administrative costs for Agency approval. The amount removed from the
IRP revolving fund for administrative costs in any year must be
reasonable, must not exceed the actual cost of operating the IRP
revolving fund, including loan servicing and providing technical
assistance, and must not exceed the amount approved by the Agency in the
intermediary's annual budget.**

## 14

(Revision 2)

> RD Instruction 4274-D

§ 4274.332(b) (Con.)

**(3) A reasonable amount of revolved funds must be used to create a
reserve for bad debts. Reserves should be accumulated over a period of
years. The total amount should not exceed maximum expected losses,
considering the quality of the intermediary\'s portfolio of loans.
Unless the intermediary provides loss and delinquency records that, in
the opinion of the Agency, justifies different amounts, a reserve for
bad debts of 6 percent of outstanding loans must be accumulated over 3
years and then maintained.**

**(4) Any cash in the IRP revolving fund from any source that is not
needed for debt service, approved administrative costs, or reasonable
reserves must be available for additional loans to ultimate
recipients.**

**(5) All reserves and other cash in the IRP revolving loan fund not
immediately needed for loans to ultimate recipients or other authorized
uses will be deposited in accounts in banks or other financial
institutions. Such accounts will be fully covered by Federal deposit
insurance or fully collateralized with U.S. Government obligations, and
must be interest bearing. Any interest earned thereon remains a part of
the IRP revolving fund.**

**(6) If an intermediary receives more than one IRP loan, it need not
establish and maintain a separate IRP revolving loan fund for each loan;
it may combine them and maintain only one IRP revolving fund, unless the
Agency requires separate IRP revolving funds because there are
significant differences in the loan purposes, work plans, loan
agreements, or requirements for the loans. The Agency may allow loans
with different requirements to be combined into one IRP revolving fund
if the intermediary agrees in writing to operate the combined revolving
funds in accordance with the most stringent requirements as required by
the Agency.**

**§§ 4274.333 - 4274.336 \[Reserved\]**

**§ 4274.337 [Other regulatory requirements]{.underline}.**

**(a) [Intergovernmental consultation]{.underline}. The IRP is subject
to the provisions of Executive Order 12372 which requires
intergovernmental consultation with State and local officials. The
approval of a loan to an intermediary will be the subject of
intergovernmental consultation. For each ultimate recipient to be
assisted with a loan from Agency IRP loan funds and for which the State
in which the ultimate recipient is to**

## 15

## (Revision 1)

(02-06-98) SPECIAL PN

RD Instruction 4274-D

§ 4274.337(a) (Con.)

**be located has elected to review the program under their
intergovernmental review process, the State Single Point of Contact must
be notified. Notification, in the form of a project description, must be
initiated by the intermediary or the ultimate recipient. Any comments
from the State must be included with the intermediary\'s request to use
the Agency loan funds for the ultimate recipient. Prior to the Agency\'s
decision on the request, compliance with the requirements of
intergovernmental consultation must be demonstrated for each ultimate
recipient. (See RD Instruction 1940-J (available in any Rural
Development State Office)).**

**(b) [Environmental requirements]{.underline}.**

**(1) Unless specifically modified by this section, the requirements of
part 1940, subpart G, of this title apply to this subpart.
Intermediaries and ultimate recipients must consider the potential
environmental impacts of their projects at the earliest planning stages
and develop plans to minimize the potential to adversely impact the
environment. Both the intermediaries and the ultimate recipients must
cooperate and furnish such information and assistance as the Agency
needs to make any of its environmental determinations.**

**(2) For each application for an initial loan to an intermediary, the
Agency will review the application, supporting materials, and any
environmental information required from the intermediary** *(Forms\
RD 1940-20, \"Request for Environmental Information,\")* **and complete
a Class II environmental assessment. This assessment will focus on the
potential cumulative impacts of the projects as well as any
environmental concerns or problems that are associated with individual
projects that can be identified at this time. Neither** **the completion
of the environmental assessment nor the approval of the application is
an Agency commitment to the use of loan funds for a specific project;
therefore, no public notification requirements for a Class II assessment
will apply to the application. An application for a subsequent loan to
an intermediary may be considered a categorical exclusion for
environmental review, rather than a Class II action, provided the
service area, eligibility requirements, and eligible purposes for loans
to ultimate recipients will be the same for the subsequent loan as were
considered in the previous environmental assessment and the purpose of
the loan is not environmentally controversial.** (Revised 08-19-05,
SPECIAL PN.)

16

(Revision 1)

> RD Instruction 4274-D

§ 4274.337(b) (Con.)

**(3) For each proposed loan from an intermediary to an ultimate
recipient using Agency IRP loan funds, the Agency will complete the
environmental review required by part 1940, subpart G, of this title,
including public notification requirements. The results of this review
will be used by the Agency in making its decision on concurrence in the
proposed loan. The Agency will prepare an Environmental Impact Statement
for any application for a loan from Agency IRP loan funds determined to
have a significant effect on the quality of the human environment.**

## 16A

## (Added 08-19-05, SPECIAL PN)

## (02-06-98) SPECIAL PN 

RD Instruction 4274-D

§ 4274.337 (Con.)

**(c) [Equal opportunity and nondiscrimination
requirements]{.underline}.**

**(1) In accordance with title V of Pub. L. 93-495, the Equal Credit
Opportunity Act, and section 504 of the Rehabilitation Act for Federally
Conducted Programs and Activities, neither the intermediary nor the
Agency will discriminate against any employee, proposed intermediary or
proposed ultimate recipient on the basis of sex, marital status, race,
color, religion, national origin, age,**

**physical or mental disability (provided the proposed intermediary or
proposed ultimate recipient has the capacity to contract), because all
or part of the proposed intermediary\'s or proposed ultimate
recipient\'s income is derived from public assistance of any kind, or
because the proposed intermediary or proposed ultimate recipient has in
good faith exercised any right under the Consumer Credit Protection Act,
with respect to any aspect of a credit transaction anytime Agency loan
funds are involved.**

**(2) The regulations contained in subpart E of part 1901 of this title
apply to this program.**

**(3) The Administrator will assure that equal opportunity and
nondiscrimination requirements are met in accordance with the Equal
Credit Opportunity Act, Title VI of the Civil Rights Act of 1964,
\"Nondiscrimination in Federally Assisted Programs,\" 42 U.S.C.\
2000d-4, Section 504 of the Rehabilitation Act for Federally Conducted
Programs and Activities, the Age Discrimination Act of 1975, and the
Americans with disabilities Act.** *If there is indication of
noncompliance with these requirements, such facts will be reported in
writing to the Administrator, ATTN: Civil Rights Staff.*

(*4) Civil rights compliance reviews should be conducted by the Agency
within the first year after loan closing and thereafter at intervals of
not more than 3 years until the Agency IRP loan funds have all been
loaned to ultimate recipients. The results of the review should be
documented on Form RD 400-8, \"Compliance Review (Nondiscrimination by
Recipients of Financial Assistance through Farmers Home
Administration),\" and appropriate documentation attached to
substantiate findings of compliance or noncompliance. The original Form
RD 400-8 should be maintained in the case file with copies forwarded to
the Rural Development State Civil Rights Coordinator. If the
intermediary is not in compliance, copies should also be immediately
forwarded to the Director, Civil Rights Staff, with a recommendation for
action to be taken.*

## 17

## 

(02-06-98) SPECIAL PN

RD Instruction 4274-D

§ 4274.337 (Con.)

**(d) Seismic safety of new building construction.**

**(1) The Intermediary Relending Program is subject to the provisions of
Executive Order 12699 that requires each Federal agency assisting in the
financing, through Federal grants or loans, or guaranteeing the
financing, through loan or mortgage insurance programs, of newly
constructed buildings to assure appropriate consideration of seismic
safety.**

**(2) All new buildings financed with Agency IRP loan funds shall be
designed and constructed in accordance with the seismic provisions of
one of the following model building codes or the latest edition of that
code providing an equivalent level of safety to that contained in the
latest edition of the National Earthquake Hazard Reduction Programs
(NEHRP) Recommended Provisions for the Development of Seismic
Regulations for New Building (NEHRP Provisions):**

**(i) 1991 International Conference of Building Officials (ICBO) Uniform
Building Code;**

**(ii) 1993 Building Officials and Code Administratiors International,
Inc. (BOCA) National Building Code; or**

**(iii) 1992 Amendments to the Southern Building Code Congress
International (SBCCI) Standard Building Code.**

**(3) The date, signature, and seal of a registered architect or
engineer and the identification and date of the model building code on
the plans and specifications shall be evidence of compliance with the
seismic requirements of the appropriate code.**

**§ 4274.338 [Loan agreements between the Agency and the
intermediary]{.underline}.**

**A loan agreement or supplement to a previous loan agreement must be
executed by the intermediary and the Agency at loan closing for each
loan. The loan agreement will be prepared by the Agency** *using Form RD
4274-4, \"Intermediary Relending Program Loan Agreement,\" or Form RD
4274-5, "Intermediary Relending Program Supplemental Loan Agreement,"*
**and reviewed by the intermediary prior to loan closing.**

**(a) The loan agreement will, as a minimum, set out:**

**(1) The amount of the loan;**

**(2) The interest rate;**

## 18

##  

## RD Instruction 4274-D

§ 4274.338(a) (Con.)

**(3) The term and repayment schedule;**

**(4) The provisions for late charges. The intermediary shall pay a late
charge of 4 percent of the payment due if payment is not received within
15 calendar days following the due date. The late charge shall be
considered unpaid if not received within 30 calendar days of the missed
due date for which it was imposed. Any unpaid late charge shall be added
to principal and be due as an extra payment at the end of the term.
Acceptance of a late charge by the Agency does not constitute a waiver
of default;**

**(5) The disbursement procedure. Disbursement of loan funds by the
Agency to the intermediary shall take place after the loan agreement and
promissory note are executed, and any other conditions precedent to
disbursement of funds are fully satisfied. For purposes of computing
interest, the date of each draw down shall constitute the date the funds
are advanced under the loan agreement;**

**(i) The intermediary may initially draw up to 25 percent of the loan
funds or, the intermediary must have at least one ultimate recipient
loan application ready to close. Upon requesting a disbursement, the
intermediary must provide documentation showing that its equity
contribution has been deposited into the IRP revolving loan fund
account. The initial draw must be deposited in an interest bearing
account in accordance with § 4274.332(b)(5) until needed and must be
used for loans to ultimate recipients before any additional Agency IRP
loan funds may be drawn by the intermediary. Any funds from the initial
draw that have not been used for loans to ultimate recipients within 1
year from the date of the draw must be returned to the Agency as an
extra payment on the loan. Agency IRP loan funds must not be used for
administrative expenses;** (Revised 08-19-05, SPECIAL PN.)

**(ii) After the initial draw of funds, an intermediary may draw down
only such funds as are necessary to cover a 30-day period in
implementing its approved work plan. Advances must be requested by the
intermediary in writing.** *The intermediary may use Form RD 440-11,
\"Estimate of Funds Needed for 30-day Period Commencing \_\_\_\_\_\_,\"
to request the funds.*

## 19

## (Revision 2)

(02-06-98) SPECIAL PN

RD Instruction 4274-D

§ 4274.338(a)(5) (Con.)

*(iii) If it is necessary to return funds to the Agency in accordance
with paragraph (a)(5)(i) of this section, the returned funds will be
applied to the intermediary's loan according to the provisions of the
promissory note for extra payments. Such returned funds will not be
available to draw again.* (Added 12-01-99, PN 313.)

**(6) The provisions regarding default. On the occurrence of any event
of default, the Agency may declare all or any portion of the debt and
interest to be immediately due and payable and may proceed to enforce
its rights under the loan agreement or any other instruments securing or
relating to the loan and in accordance with the applicable law and
regulations. Any of the following may be regarded as an \"event of
default\" in the sole discretion of the Agency:**

**(i) Failure of the intermediary to carry out the specific activities
in its loan application as approved by the Agency or comply with the
loan terms and conditions of the loan agreement, any applicable Federal
or State laws, or with such USDA or Agency regulations as may become
applicable;**

**(ii) Failure of the intermediary to pay within 15 calendar days of its
due date any installment of principal or interest on its promissory note
to the Agency;**

**(iii) The occurrence of;**

**(A) The intermediary becoming insolvent, or ceasing, being unable, or
admitting in writing its inability to pay its debts as they mature, or
making a general assignment for the benefit of, or entering into any
composition or arrangement with creditors, or;**

**(B) Proceedings for the appointment of a receiver, trustee, or
liquidator of the intermediary, or of a substantial part of its assets,
being authorized or instituted by or against it;**

**(iv) Submission or making of any report, statement, warranty, or
representation by the intermediary or agent on its behalf to USDA or the
Agency in connection with the financial assistance awarded hereunder
which is false, incomplete, or incorrect in any material respect; or**

## 20

## (Revision 2)

(02-06-98) SPECIAL PN

RD Instruction 4274-D

§ 4274.338(6) (Con.)

**(v) Failure of the intermediary to remedy any material adverse change
in its financial or other condition (such as the representational
character of its board of directors or policymaking body) arising since
the date of the Agency\'s award of assistance hereunder, which condition
was an inducement to Agency\'s original award.**

**(7) The insurance requirements.**

**(i) Hazard insurance with a standard mortgage clause naming the
intermediary as beneficiary will be required by the intermediary on
every ultimate recipient\'s project funded from the IRP revolving fund
in an amount that is at least the lesser of the depreciated replacement
value of the property being insured or the amount of the loan. Hazard
insurance includes fire, windstorm, lightning, hail, business
interruption,**

## 20A

## (Revision 1)

(02-06-98) SPECIAL PN

RD Instruction 4274-D

§ 4374.338(a)(7)(i) (Con.)

**explosion, riot, civil commotion, aircraft, vehicle, marine, smoke,
builder\'s risk, public liability, property damage, flood or mudslide,
or any other hazard insurance that may be required to protect the
security. The intermediary\'s interest in the** **insurance will be
assigned to the Agency, upon the Agency\'s request, in the event of
default by the intermediary.**

**(ii) Ordinarily, life insurance, which may be decreasing term
insurance, is required for the principals and key employees of the
ultimate recipient funded from the IRP revolving fund and will be
assigned or pledged to the intermediary and subsequently, in the event
of request by the Agency following default by the intermediary, to the
Agency. A schedule of life insurance available for the benefit of the
loan will be included as part of the application.**

**(iii) Workmen\'s compensation insurance on ultimate recipients is
required in accordance with the State law.**

**(iv) Flood insurance. The intermediary is responsible for determining
if an ultimate recipient funded from the IRP revolving fund is located
in a special flood or mudslide hazard area. If the ultimate recipient is
in a flood or mudslide area, then flood or mudslide insurance must be
provided in accordance with subpart B of part 1806 of this chapter (RD
Instruction 426.2).**

**(v) Intermediaries will provide fidelity bond coverage for all persons
who have access to intermediary funds. Coverage may be provided either
for all individual positions or persons, or through \"blanket\" coverage
providing protection for all appropriate employees and officials. The
Agency may also require the intermediary to carry other appropriate
insurance, such as public liability, workers compensation, and property
damage**.

**(A) The amount of fidelity bond coverage required by the Agency will
normally approximate the total annual debt service requirements for the
Agency loans;**

**(B) Other types of coverage may be considered acceptable if it is
determined by the Agency that they fulfill essentially the same purpose
as a fidelity bond;**

## 21

(02-06-98) SPECIAL PN

RD Instruction 4274-D

§ 4274.338(a)(7)(v) (Con.)

**(C) Intermediaries must provide evidence of\
adequate fidelity bond and other appropriate insurance coverage by loan
closing. Adequate coverage in accordance with this section must then be
maintained for the life of the loan. It is the responsibility of the
intermediary to assure and provide evidence that adequate coverage is
maintained. This may consist of a listing of policies and coverage
amounts in reports required by paragraph (b)(4) of this section or other
documentation;**

**(b) The intermediary will agree in the Loan Agreement:**

**(1) Not to make any changes in the intermediary\'s articles of
incorporation, charter, or by-laws without the concurrence of the
Agency;**

**(2) Not to make a loan commitment to an ultimate recipient to be
funded from Agency IRP loan funds without first receiving the Agency\'s
written concurrence;**

**(3) To maintain a separate ledger and segregated account for the IRP
revolving fund;**

**(4) To Agency reporting requirements by providing:**

**(i) An annual audit;**

**(A) Dates of audit report period need not necessarily coincide with
other reports on the IRP. Audit reports shall be due 90 days following
the audit period. Audits must cover all of the intermediary\'s
activities. Audits will be performed by an independent certified public
accountant. An acceptable audit will be performed in accordance with
Generally Accepted Government Auditing Standards and include such tests
of the accounting records as the auditor considers necessary in order to
express an opinion on the financial condition of the intermediary. The
Agency does not require an unqualified audit opinion as a result of the
audit. Compilations or reviews do not satisfy the audit**
**requirement**;

## 22

##  

RD Instruction 4274-D

§ 4274.338(b)(4)(i) (Con.)

**(B) It is not intended that audits required by this subpart be
separate and apart from audits performed in accordance with State and
local laws or for other purposes. To the extent feasible, the audit work
should be done in connection with these audits. Intermediaries covered
by OMB Circular A-133 should submit audits made in accordance with that
circular;** (Revised 08-19-05, SPECIAL PN.)

**(ii) Quarterly or semiannual reports (due 30 days after the end of the
period);**

**(A) Reports will be required quarterly during the first year after
loan closing and, if all loan funds are not utilized during the first
year, quarterly reports will be continued until at least 90 percent of
the Agency IRP loan funds have been advanced to ultimate recipients.
Thereafter, reports will be required semiannually. Also, the Agency may
require quarterly reports if the intermediary becomes delinquent in
repayment of its loan or otherwise fails to fully comply with the
provisions of its work plan or Loan Agreement, or the Agency determines
that the intermediary's IRP revolving fund is not adequately protected
by the current sound worth and paying capacity of the ultimate
recipients.**

**(B) These reports shall contain information only on the IRP revolving
loan fund, or if other funds are included, the IRP loan program portion
shall be segregated from the others; and in the case where the
intermediary has more than one IRP revolving fund from the Agency a
separate report shall be made for** **each of the IRP revolving funds.**

**(C) The reports will include, on a form provided by the Agency,**
*(Form RD 1951-4, \"Report of IRP/RDLF Lending Activity")* **information
on the intermediary\'s lending activity, income and expenses, financial
condition and a summary of names and characteristics of the ultimate
recipients the intermediary has financed.**

**(iii) Annual proposed budget for the following year; and**

**(iv) Other reports as the Agency may require from time to time.**

## 23

## (Revision 1)

(02-06-98) SPECIAL PN

RD Instruction 4274-D

§ 4274.338(b) (Con.)

**(5) Before the first relending of Agency funds to an ultimate
recipient, to obtain written Agency approval of;**

**(i) All forms to be used for relending purposes, including application
forms, loan agreements, promissory notes, and security instruments;**

**(ii) Intermediary\'s policy with regard to the amount and form of
security to be required;**

**(6) To obtain written approval of the Agency before making any
significant changes in forms, security policy, or the work plan. The
servicing officer may approve changes in forms, security policy, or work
plans at any time upon a written request from the intermediary and
determination by the Agency that the change will** **not jeopardize
repayment of the loan or violate any requirement of this subpart or
other Agency regulations. The intermediary must comply with the work
plan approved by the Agency so long as any portion of the
intermediary\'s IRP loan is outstanding;**

**(7) To secure the indebtedness by pledging the IRP revolving fund,
including its portfolio of investments derived from the proceeds of the
loan award, and pledging its real and personal property, and other
rights and interests as the Agency may require;**

**(8) In the event the intermediary's financial condition deteriorates
or the intermediary takes action detrimental to prudent fund operation
or fails to take action required of a prudent lender, to provide
additional security, execute any additional documents, and undertake any
reasonable acts the Agency may request, to protect the Agency's interest
or to perfect a security interest in any assets, including physical
delivery of assets and specific assignments; and**

**(9) If any part of the loan has not been used in accordance with the
intermediary\'s work plan by a date 3 years from the date of the loan
agreement, the Agency may cancel the approval of any funds not yet
delivered to the intermediary and the intermediary will return, as an
extra payment on the loan, any funds delivered to the intermediary that
have not been used by the intermediary in accordance with the work plan.
The Agency, at its sole discretion, may allow the intermediary
additional time to use the loan funds by delaying cancellation of the
funds by not more than 3 additional years. If any loan funds have not
been used by 6 years from the date of the loan agreement, the approval
will be canceled of any funds that have not been delivered to the
intermediary and the**

## 24

## (Revision 1) 

RD Instruction 4274-D

§ 4274.338(b)(9) (Con.)

**intermediary will return, as an extra payment on the loan, any funds
it has received and not used in accordance with the work plan. In
accordance with the Intermediary Relending Program promissory note**
*(Form RD 4274-3, \"Intermediary Relending Program Promissory
Note\")***, regular loan payments will be based on the amount of funds
actually drawn by the intermediary.**

*(i) During the maximum deferral period, the intermediary should ensure
that all funds are advanced to ultimate recipients. After the approved
deferral period, the servicing office will, as required by the executed
"Promissory Note," ensure that payments are billed to the intermediary
by the Government at least 30 days in advance of the payment due date
and that payments shall be based on the full amortized loan amount owed
to the Government. (Added 12-07-05, PN 392.)*

*(ii) The intermediary should be reminded at loan closing that the
deferral period is designed to allow it sufficient time to re-lend its
funds, and develop its portfolio to the extent that repayments from its
ultimate recipients will fund the intermediary's repayments to the
Government. Failure on the part of the intermediary to sufficiently
re-lend its funds, may result in the intermediary being required to
immediately return the unused funds. Any delay in fully amortizing the
IRP loan, after the maximum 3-year principal deferral, will increase the
principal portion of the loan payment in subsequent years. (Added
12-07-05, PN 392.)*

**§§ 4274.339 - 4274.342 \[Reserved\]**

**§ 4274.343 [Application]{.underline}.**

**(a) The application will consist of:**

**(1) An application form provided by the Agency** *(Form RD 4274-1,
\"Application for Loan (Intermediary Relending Program)")***.**

**(2) A written work plan and other evidence the Agency requires to
demonstrate the feasibility of the intermediary\'s program to meet the
objectives of this program. The plan must, at a minimum:**

25

(Revision 1)

(02-06-98) SPECIAL PN

RD Instruction 4274-D

§ 4274.343(a)(2) (Con.)

**(i) Document the intermediary\'s ability to administer IRP in
accordance with the provisions of this subpart. In order to adequately
demonstrate the ability to administer the program, the intermediary must
provide a complete listing of all personnel responsible for
administering this program along**

**with a statement of their qualifications and experience. The personnel
may be either members or employees of the intermediary\'s organization
or contract personnel hired for this purpose. If the personnel are to be
contracted for, the**

**contract between the intermediary and the entity providing such
service will be submitted for Agency review, and the terms of the
contract and its duration must be sufficient to adequately service the
Agency loan through to its ultimate conclusion. If the Agency determines
the personnel lack the necessary expertise to administer the program,
the loan request will not be approved;**

**(ii) Document the intermediary\'s ability to commit financial
resources under the control of the intermediary to the establishment of
IRP. This should include a statement of the sources of non-Agency funds
for administration of the intermediary\'s operations and financial
assistance for projects;**

**(iii) Demonstrate a need for loan funds. As a minimum, the
intermediary should identify a sufficient number of proposed and known
ultimate recipients it has on hand to justify Agency funding of its loan
request, or include well developed** **targeting criteria for ultimate
recipients consistent with the intermediary\'s mission and strategy for
IRP, along with supporting statistical or narrative evidence that such
prospective recipients exist in sufficient numbers to justify Agency
funding of the loan request;**

**(iv) Include a list of proposed fees and other charges it will assess
the ultimate recipients;**

**(v) Demonstrate to Agency satisfaction that the intermediary has
secured commitments of significant financial support from public
agencies and private organizations;**

**(vi) Provide evidence to Agency satisfaction that the intermediary has
a proven record of obtaining private or philanthropic funds for the
operation of similar programs to IRP;**

26

(Revision 1)

(02-06-98) SPECIAL PN

RD Instruction 4274-D

§ 4274.343(a)(2) (Con.)

**(vii) Include the intermediary\'s plan (specific loan purposes)**
**for relending the loan funds. The plan must be of sufficient detail to
provide the Agency with a complete understanding of what the
intermediary will accomplish by lending the funds to the ultimate
recipient and the complete mechanics of how the funds will get from the
intermediary to the ultimate recipient. The service area, eligibility
criteria, loan purposes, fees, rates, terms, collateral requirements,
limits, priorities, application process, method of disposition of the
funds to the ultimate recipient, monitoring of the ultimate recipient\'s
accomplishments, and reporting requirements by the ultimate recipient\'s
management are some of the items that must be addressed by the
intermediary\'s relending plan;**

**(viii) Provide a set of goals, strategies, and anticipated outcomes
for the intermediary\'s program. Outcomes should be expressed in
quantitative or observable terms such as jobs created for low-income
area residents or self empowerment opportunities funded, and should
relate to the purpose of IRP (see § 4274.301(b)); and**

## 26A

## (Added 12-07-05, PN 392)

## (02-06-98) SPECIAL PN 

RD Instruction 4274-D

§ 4274.343(a)(2) (Con.)

**(ix) Provide specific information as to whether and how the**
**intermediary will ensure that technical assistance is made available
to ultimate recipients and potential ultimate recipients. Describe the
qualifications of the technical assistance providers, the nature of
technical assistance that will be available, and expected and committed
sources of funding for technical assistance. If other than the
intermediary itself, describe the organizations providing such
assistance and the arrangements between such organizations and the
intermediary;**

**(3) Environmental information on a form provided by the Agency**
*(Form RD 1940-20)* **for all projects positively identified as proposed
ultimate recipient loans that are Class I or Class II actions under
subpart G of part 1940 of this title;**

**(4) Comments from the State Single Point of Contact, if the State has
elected to review the program under Executive Order 12372;**

**(5) A [pro]{.underline} [forma]{.underline} balance sheet at start-up
and projected balance sheets for at least 3 additional years; financial
statements for the last 3 years, or from inception of the operations of
the intermediary if less than 3 years; and projected cash flow and
earnings statements for at least 3 years supported by a list of
assumptions showing the basis for the projections. The projected
earnings statement and balance sheet must include one set of projections
that shows the IRP revolving fund only and a separate set of projections
that shows the proposed intermediary organization\'s total operations.
Also, if principal repayment on the IRP loan will not be scheduled
during the first 3 years, the projections for the IRP revolving fund
must extend to include a year with a full annual installment on the IRP
loan;**

**(6) A written agreement of the intermediary to the Agency audit
requirements;**

**(7) An agreement on a form provided by the Agency (***Form RD 400-4,
\"Assurance Agreement,\")* **assuring compliance with Title VI of the
Civil Rights Act of 1964;**

**(8) Complete organizational documents, including evidence of authority
to conduct the proposed activities;**

## 27

## 

(02-06-98) SPECIAL PN

RD Instruction 4274-D

§ 4274.343(a) (Con.)

**(9) Evidence that the loan is not available at reasonable rates and
terms from private sources or other Federal, State, or local programs;**

**(10) Latest audit report, if available;**

**(11) A form provided by the Agency** *(Form RD 1910-11, \"Applicant
Certification Federal Collection Policies for Consumer or Commercial
Debts\")* **in which the applicant certifies its understanding of the
Federal collection policies for consumer or commercial debts;**

**(12) A Department of Agriculture form containing a certification
regarding debarment, suspension, and other responsibility matters for
primary covered transactions** *(Form AD-1047, "Certification Regarding
Debarment, Suspension, and other Responsibility Matters - Primary
Covered Transactions.")***; and**

**(13) A statement on a form provided by the Agency** *(Exhibit A-1 of
RD Instruction 1940-Q)* **regarding lobbying, as required by 7 CFR\
part 3018***.*

**(b) Applications from intermediaries that already have an active IRP
loan may be streamlined as follows:**

**(1) The requirements of paragraphs (a)(6), (a)(8), and (a)(10) of this
section may be omitted;**

**(2) A statement that the new loan would be operated in accordance with
the work plan on file for the previous loan may be submitted in lieu of
a new work plan; and**

**(3) The financial information required by paragraph (a)(5) of this
section may be limited to projections for the proposed new IRP revolving
loan fund.**

**§ 4274.344 [Filing and processing applications for
loans]{.underline}.**

**(a) [Intermediaries\' contact]{.underline}. Intermediaries desiring
assistance under this subpart may file applications with the state
office for the state in which the intermediary\'s headquarters is
located. Intermediaries headquartered in the District of Columbia may
file the application with the National Office, Rural
Business-Cooperative Service, USDA, Specialty Lenders Division, STOP
1521, 1400 Independence Avenue SW, Washington,\
DC 20250-1521.**

## 28

##  

RD Instruction 4274-D

§ 4274.344 (Con.)

**(b) [Filing applications]{.underline}. Intermediaries must file the
complete application, in one package. Applications received by the
Agency will be reviewed and ranked quarterly and funded in the order of
priority ranking. The Agency will retain unsuccessful applications for
consideration in subsequent reviews, through a total of four quarterly
reviews.**

**(c) [Loan priorities]{.underline}. A point system will be used to
determine an eligible applicant's priority for available loan funds.
Points will be allowed only for factors indicated by well documented,
reasonable plans which, in the opinion of the Agency, provide assurance
that the items have a high probability of being accomplished. The points
awarded will be as specified in paragraphs (c)(1) through (c)(6) of this
section. If an application does not fit one of the categories listed, it
receives no points for that paragraph or subparagraph**.\
(Revised 08-19-05, SPECIAL PN.)

**(1) [Other funds]{.underline}. Points allowed under this paragraph are
to be based on documented successful history or written evidence that
the funds are available.**

**(i) The intermediary will obtain non-Federal loan or grant funds to
pay part of the cost of the ultimate recipients\' projects. The amount
of funds from other sources will average:**

**(A) At least 10% but less than 25% of the total project cost - 5
points;**

**(B) At least 25% but less than 50% of the total project cost - 10
points; or**

**(C) 50% or more of the total project cost - 15 points.**

**(ii) The intermediary will provide loans to ultimate recipients from
its project contribution funds to pay part of the costs of ultimate
recipient projects. Project contribution funds must be separate and
distinct from any loan or grant dollars provided to the intermediary
under the IRP as well as the intermediary's equity contribution. When
evaluating an application for initial or supplemental funding, the
Agency will consider the level of the applicant's project contribution
and award points as follows:** (Revised 08-19-05, SPECIAL PN.)

## 29

## (Revision 1)

(02-06-98) SPECIAL PN

RD Instruction 4274-D

§ 4274.344(c)(1)(ii) (Con.)

**(A) At least 10% but less than 25% of the total project costs - 5
points;**

**(B) At least 25% but less than 50% of total project**

**costs - 10 points; or**

**(C) 50% or more of total project costs - 15 points.**

**(2) [Employment]{.underline}. For computations under this paragraph,
income data should be from the latest decennial census of the United
States, updated according to changes in the consumer price index. The
poverty line used will be as defined in section 673 (2) of the Community
Services Block Grant Act (42 U.S.C. 9902(2)). Unemployment data used
will be that published by the Bureau of Labor Statistics, U.S.
Department of Labor.**

**(i) The median household income in the service area of the proposed
intermediary equals the following percentage of the poverty line for a
family of four:**

**(A) At least 150% but not more than 175% - 5 points;**

**(B) At least 125% but less than 150% - 10 points; or**

**(C) Below 125% - 15 points.**

**(ii) The following percentage of the loans the intermediary makes from
Agency IRP loan funds will be in counties with median household income
below 80 percent of the statewide\
non-metropolitan median household income. (To receive priority points
under this category, the intermediary must provide a list of counties in
the service area that have qualifying income):**

**(A) At least 50% but less than 75% - 5 points;**

**(B) At least 75% but less than 100% - 10 points; or**

**(C) 100% - 15 points.**

## 30

## (Revision 1)

(02-06-98) SPECIAL PN

RD Instruction 4274-D

§ 4274.344(c)(2) (Con.)

**(iii) The unemployment rate in the intermediary\'s service area equals
the following percentage of the national unemployment rate:**

**(A) At least 100% but less than 125% - 5 points;**

**(B) At least 125% but less 150% - 10 points; or**

**(C) 150% or more - 15 points.**

**(iv) The intermediary will require, as a condition of eligibility for
a loan to an ultimate recipient from Agency IRP loan funds, that the
ultimate recipient certify in writing that it will employ the following
percentage of its workforce from members of families with income below
the poverty line:**

## 30A

## (Added 08-19-05, SPECIAL PN)

(02-06-98) SPECIAL PN

RD Instruction 4274-D

§ 4274.344(c)(2)(iv) (Con.)

**(A) At least 10% but less than 20% of the workforce - 5 points;**

**(B) At least 20% but less than 30% of the workforce - 10 points; or**

**(C) 30% of the workforce or more - 15 points.**

**(v) The intermediary has a demonstrated record of providing assistance
to members of underrepresented groups, has a realistic plan for
targeting loans to members of underrepresented groups, and, based on the
intermediary\'s record and plans, it is expected that the following
percentages of its loans made from Agency IRP loan funds will be made to
entities owned by members of underrepresented groups:**

**(A) At least 10% but less than 20% - 5 points;**

**(B) At least 20% but less than 30% - 10 points; or**

**(C) 30% or more - 15 points.**

**(vi) The population of the service area according to the most recent
decenial census was lower than that recorded by the previous decenial
census by the following percentage:**

**(A) At least 10 percent but less than 20 percent - 5 points;**

**(B) At least 20 percent but less than 30 percent - 10 points; or**

**(C) 30 percent or more - 15 points.**

**(3) [Intermediary contribution]{.underline}. All assets of the IRP
revolving fund will serve as security for the IRP loan, and the
intermediary will contribute funds not derived from the Agency into the
IRP revolving fund along with the proceeds of the IRP loan. The amount
of non-Agency derived funds contributed to the IRP revolving fund will
equal the following percentage of the Agency IRP loan:**

**(i) At least 5% but less than 15% - 15 points;**

**(ii) At least 15% but less than 25% - 30 points; or**

**(iii) 25% or more - 50 points.**

## 31

## (Revision 1)

(02-06-98) SPECIAL PN

RD Instruction 4274-D

§ 4274.344(c) (Con.)

**(4) [Experience]{.underline}. The intermediary has actual experience
in making and servicing commercial loans, with a successful record, for
the following number of full years:**

**(i) At least 1 but less than 3 years - 5 points;**

**(ii) At least 3 but less than 5 years - 10 points;**

**(iii) At least 5 but less than 10 years - 20 points; or**

**(iv) 10 or more years - 30 points.**

**(5) [Community representation]{.underline}. The service area is not
more than 14 counties and the intermediary utilizes local opinions and
experience by including community representatives on its board of
directors or equivalent oversight board. For purposes of this section,
community representatives are people, such as civic leaders, business
representatives, or bankers, who reside in the service area and are not
employees of the intermediary. Points will be assigned as follows:**

**(i) At least 10% but less than 40% of the board members are community
representatives - 5 points;**

**(ii) At least 40% but less than 75% of the board members are community
representatives - 10 points; or**

**(iii) At least 75% of the board members are community
representatives - 15 points.**

**(6) [Administrative]{.underline}. The Administrator may assign up to
35 additional points to an application to account for the following
items not adequately covered by the other priority criteria set out in
this section. The items that may be considered are the amount of funds
requested in relation to the amount of need; a particularly successful
business development record; a service area with no other IRP coverage**
(15 points may only be awarded where it is the intermediary's initial
application and/or there are no other intermediaries in the targeted
service area, and 5 points may be awarded only if the intermediary has
demonstrated that the service area has expanded since its prior
application and must be documented in the workplan); **a service area
with severe economic problems, such as communities that have remained
persistently poor over the last 60 years or have experienced long-term
population decline or job deterioration; a service area with emergency
conditions caused by a natural disaster or loss of a major industry; a
work plan that is in**

## 32

## (Revision 1) 

RD Instruction 4274-D

§ 4274.344(c) (Con.)

**accord with a strategic plan, particularly a plan prepared as part of
a request for an Empowerment Zone/Enterprise Community designation; or
excellent utilization of a previous IRP loan.** *An assignment of points
by the Administrator will be based on Exhibit A, Attachment 1 of RD
Instruction 1940-L and written justification stating the
Administrator\'s reasons, and will be maintained in the files of the
National Office.* (Revised 08-19-05, SPECIAL PN.)

## 32A

## (Added 08-19-05, SPECIAL PN)

## (02-06-98) SPECIAL PN 

RD Instruction 4274-D

**§§ 4274.345 - 4274.348 \[Reserved\]**

*§ 4274.349 [Agency evaluation of application]{.underline}.*

*(a) Within 5 days of receipt of an IRP application, the Processing
Officer must notify the National Office, Specialty Lenders Division, by
e-mail of the date the application was received, the name and address of
the proposed intermediary and the amount of loan requested. A priority
scoresheet must be completed, along with Exhibit A, Attachment 1 of\
RD Instruction 1940-L and e-mailed to arrive in the National Office,
Specialty Lenders Division, no later than the last day of the month
prior to the first day of the quarter to be considered during the
quarter for an allocation of funds.* (Revised 08-19-05, SPECIAL PN.)

*(b) The Processing Office will input the necessary data via terminal
screens into the Rural Community Fa cility Tracking System. If the
Processing Officer so desires, a Form RD 2033-34, \"Management System
Card - Business and Industry,\" may be prepared in accordance with\
RD Instruction 2033-F.*

*(c) Applications will be organized in a loan file in accordance with\
RD Instruction 2033-A. The intermediary\'s Internal Revenue Service tax
number preceded by State and county code numbers will constitute the
case number to be used on all Agency forms.*

*(d) The Processing Office will complete Form RD 4274-2, \"IRP Project
Summary,\" evaluate the application, complete an environmental
assessment, and make a determination whether: the intermediary is
eligible; the proposed loan is for an eligible purpose; there is
reasonable assurance of repayment ability, sufficient collateral, and
sufficient equity; there are any unresolved intergovernmental
consultation issues; and the proposed loan complies with all applicable
statutes and regulations. If the Agency determines it is unable to
provide the loan, the intermediary will be informed in writing. Such
notification will include the reasons for denial of the loan*.

**§ 4274.350 [Letter of conditions]{.underline}.**

**If the Agency is able to make the loan, it will provide the
intermediary a letter of conditions listing all requirements for the
loan. Immediately after reviewing the conditions and requirements in the
letter of conditions, the intermediary should complete, sign and
return** **the form provided by the Agency indicating the intermediary's
intent to meet the conditions** (F*orm\
RD 1942-46, \"Letter of Intent To Meet Conditions,\")*. **If certain
conditions cannot be met, the intermediary may propose alternate
conditions to the Agency. The Agency loan approval official must concur
with any changes made to the initially issued or proposed letter of
conditions prior to acceptance.**

## 33

## (Revision 1) 

## RD Instruction 4274-D

§ 4274.350 (Con.)

*(a) Requirements listed in letters of conditions will ordinarily
include: maximum amount of loan which may be considered, terms of loan,
description of the use of loan funds, verification requirements,
disbursement of funds, security requirements, and audit reports
required.*

*(b) The letter of conditions will contain the following paragraphs:*

*\"This letter establishes conditions which must be understood and
agreed to by you before further consideration may be given to the
application. Any changes in project cost, source of funds, project
scope, or any other significant changes in the project or intermediary
must be reported to and approved by USDA by written amendment to this
letter. Any changes not approved by USDA shall be cause for
discontinuing processing of the application.\"*

*\"This letter is not to be considered as loan approval or as
representation to the availability of funds. The docket may be completed
on the basis of a loan not to exceed \$\_\_\_\_\_\_\_.\"*

*The intermediary's attorney will provide an opinion, satisfactory to
RBS, that RBS has a first lien position on the borrower's IRP depository
bank account.* (Added 08-19-05, SPECIAL PN.)

*\"You must certify at loan closing that since the Agency\'s issuance of
the letter of conditions there has been no material changes in your
financial condition nor any other material change in the
intermediary.\"*

*\"The loan will be considered approved on the date a signed copy of
Form RD 1940-1, \"Request for Obligation of Funds,\" is mailed to
you.\"*

*\"Please complete and return the attached Form RD 1942-46, \"Letter of
Intent to Meet Conditions,\" if you desire that further consideration be
given your application.\"*

*\"If the conditions set forth in this letter are not met within
\_\_\_\_\_\_\_\_\_\_ days from the date hereof, the Agency reserves the
right to discontinue the processing of the application. You will be
notified, in writing, by the Agency of any such discontinuance.\"*

34

(Revision 1)

> RD Instruction 4274-D

§ 4274.350 (Con.)

*(c) If at any time prior to loan approval it is decided that favorable
action will not be taken on an application, the Processing Officer will
notify the proposed intermediary in writing of the reasons why the
request was not favorably considered. The notification to the proposed
intermediary will state that a review or appeal of this decision by the
Agency may be requested by the proposed intermediary in accordance with
USDA appeal regulations*.

**§§ 4274.351 - 4274.354 \[Reserved\]**

## 34A

## (Added 08-19-05, SPECIAL PN)

## (02-06-98) SPECIAL PN 

RD Instruction 4274-D

**§ 4274.355 [Loan approval and obligating funds]{.underline}.**

**The loan will be considered approved on the date the signed copy of
the obligation of funds document** *(Form RD 1940-1)* **is mailed to the
intermediary. The approving official may request an obligation of funds
when available and according to the following:**

**(a) The obligation of funds document** *(Form RD 1940-1)* **may be
executed by the loan approving official providing the intermediary has
the legal authority to contract for a loan and to enter into required
agreements, and has signed the obligation of funds document** *(Form RD
1940-1)***.**

**(b) An obligation of funds established for an intermediary may be
transferred to a different (substituted) intermediary provided:**

**(1) The substituted intermediary is eligible to receive the assistance
approved for the original intermediary;**

**(2) The substituted intermediary bears a close and genuine
relationship to the original intermediary;** *An example of where a
close and genuine relationship could exist is when a corporation and
partnership are controlled by the same individuals and the original
borrower wishes to transfer the loan to the other entity.*

(Added 08-19-05, SPECIAL PN.) **and**

**(3) The need for and scope of the project and the purposes for which
Agency IRP loan funds will be used remain substantially unchanged.**

> *(4) Examples of cases to provide guidance and a clear direction in
> the approval of future IRP Transfers and Assumptions are as follows:
> (Added 12-07-05, PN 392.)*
>
> *(i) Loans approved, oligated, not closed or funds disbursed.*
>
> *A close and genuine relationship to the original intermediary is one
> in which the substituted organization is not a new and independent
> entity.*
>
> *(A) For example, if an entity were organized under a single umbrella
> with two subsidiary arms, one arm could transfer the intermediary
> status to the other, provided the receiving entity met eligibility and
> qualification standards.*

35

(Revision 3)

(02-06-98) SPECIAL PN

RD Instruction 4274-D

4274.355(b)(4) (Con.)

> *(B) In another example, if the original grant application was jointly
> filed by two applicants, one applicant was selected, and, upon the
> inability of the selected applicant to continue, the second applicant
> could be substituted.*
>
> *(C) The Administrator's exception authority cannot be used to waive
> any of the conditions cited in this section. By its terms, the
> Administrator's exception*
>
> *authority is not available when its use is contrary to any applicable
> law or provided the Administrator cannot determine that application of
> the requirement or provision would not adversely affect the U.S.
> Department of Agriculture's interest. Use of the Administrator's
> exception authority to waive the requirement that the substitute bear
> a close and genuine relationship to the original intermediary would
> violate applicable appropriations law.*
>
> *(D) If all conditions cannot be met, the IRP loan must be
> deobligated.*
>
> *(ii) Loans obligated, closed, and funds partially disbursed. Once an
> IRP loan has been closed and funds have been partially disbursed to
> one or more to the ultimate recipients, as set forth under RD
> Instruction 1951-R, § 1951.889, a transfer and assumption of
> intermediary status and debt can be completed only for the funds
> disbursed. If a "close and genuine relationship" does not exist, the
> undisbursed funds will be deobligated. However, if the substitute
> intermediary bears a "close and genuine relationship" a transfer and
> assumption of the entire obligation, including disbursed and
> undisbursed funds may take place.*
>
> *(iii) Loans obligated, closed, funds fully disbursed. In the event
> that an IRP loan has been closed, and all loan funds disbursed to
> ultimate recipients, a transfer and assumption can occur in accordance
> with RD Instruction 1951-R, § 1951.889. The substituted intermediary
> is not required to meet the requirement of a "close and genuine
> relationship" to the original intermediary, but the substitute
> intermediary must be servicing the same geographic area and the
> projects must be similar to the types of projects outlined by the
> original intermediary.*

*(c) If approval was concurred in by the National Office, a copy of the
concurring memorandum will be attached to the original of Form RD
1940-1.*

36

(Revision 3)

RD Instruction 4274-D

§ 4274.355 (Con.)

*(d) The approving official will request an obligation of loan funds,
after signing Form RD 1940-1, via the Agency field office terminal
system. The requesting official will record the date and time of
request, and initial on the original Form RD 1940-1.*

*(e) The obligation date and date the intermediary is notified of loan
approval by mailing the Form RD 1940-1 is 6 working days from the date
funds are reserved unless an exception is granted by the National
Office.*

*(f) Immediately after verifying that funds have been reserved,
utilizing the Agency field office terminal system status inquiry
function, the Processing Officer will notify the Legislative Affairs
Staff in the National Office as required by RD Instruction 2015-C.*

*(g) The Processing Officer will record the date of intermediary
notification on the original of Form RD 1940-1 and include it as a
permanent part of the official file.*

*(h) If a transfer of obligation of funds is necessary, complete Form\
RD 450-10, \"Advice of Borrower\'s Change of Address, Name, Case Number,
or Loan Number,\" and mail a copy to the Finance Office*.

**§ 4274.356 [Loan closing]{.underline}.**

**(a) At loan closing, the intermediary must certify to the following:**

**(1) No major changes have been made in the work plan except those
approved in the interim by the Agency.**

**(2) All requirements of the letter of conditions have been met.**

**(3) There has been no material change in the intermediary nor its
financial condition since the issuance of the letter of conditions. If
there have been changes, they must be explained. The changes may be
waived, at the sole discretion of the Agency.**

**(4) That no claim or lien of laborers, materialmen, contractors,
subcontractors, suppliers of machinery and equipment, or other parties
are pending against the security of the intermediary, and that no suits
are pending or threatened that would adversely affect the security of
the intermediary when the security instruments are filed.**

## 

## 36A

## (Revision 1)

## (02-06-98) SPECIAL PN 

## RD Instruction 4274-D

§ 4274.355 (Con.)

**(b) The Processing Officer will approve only minor changes which do
not materially affect the project, its capacity, employment, original
projections, or credit factors. Changes in legal entities or where tax
consideration are the reason for change will not be approved.**

*(c) Loan closing documents will normally include, but are not limited
to, Form RD 4274-3, Form RD 4274-4, (or Form RD 4274-5) a financing
statement, a security agreement, and an IRP revolving loan fund
agreement.*

*(d) To ensure the provisions of the loan agreement conform with the
current regulations, Form RD 4274-5 should only be used when the
borrower has a previous loan agreement on Form RD 4274-4. If the
borrower's only previous IRP loan was closed with a loan agreement in a
format other than Form RD 4274-4, Form RD 4274-4, rather than Form RD
4274-5, should be used for the subsequent loan. Form RD 4274-5 should
always refer to a previous loan agreement on Form RD 4274-4.* (Added
12-01-99, PN 313.)

*(e) After the loan has been approved, the Processing Office will
prepare the promissory note and loan agreement for review by the
Regional OGC and the intermediary.* (Renumbered 12-01-99, PN 313.)

## 36B

## (Added 12-07-05, PN 392)

## (02-06-98) SPECIAL PN 

RD Instruction 4274-D

§ 4274.356 (Con.)

*(f) The Processing Office will forward the appropriate loan docket
items to the OGC office in the region in which the borrower is located
for review. For the purpose of this paragraph, the District of Columbia
is considered to be in Maryland. After an administrative review, the
Processing* *Office will include with the docket a letter with
recommendations and indicating any special items, documents, or problems
that need to be addressed specifically which may have a significant
impact upon the loan or may be contrary to the regulation. The docket
will be assembled for OGC review and indexed and tabbed. OGC will review
the docket, furnish advice on noted deficiencies, and issue closing
instructions. Loans will be closed by the Processing Office with such
assistance of the Regional Attorney as is needed.*\
(Renumbered 12-01-99, PN 313.)

*(g) In all cases, the Processing Officer will conduct a review before
the loan is closed to assure that all requirements of the application,
letter of conditions, and loan agreement have been met including
required certifications, and will provide such verification in the loan
file, including arrangements for annual audit reports.\
*(Renumbered 12-01-99, PN 313.)

*(h) Agency personnel shall not sign any documents other than those
specifically provided for in this Instruction.\
*(Renumbered 12-01-99, PN 313.)

*(i) When the loan has been closed the Processing Officer will submit
the security instruments, other documents used in closing, and a
statement that administrative requirements have been met to the Regional
Attorney. The Regional Attorney will review the submitted material and
determine whether all legal requirements have been met.*\
(Renumbered 12-01-99, PN 313.)

**§§ 4274.357 - 4274.360 \[Reserved\]**

**§ 4274.361 [Requests to make loans to ultimate
recipients]{.underline}.**

**(a) An intermediary may use revolved funds to make loans to ultimate
recipients without obtaining prior Agency concurrence. When an
intermediary proposes to use Agency IRP loan funds to make a loan to an
ultimate recipient, and prior to final approval of such loan, Agency
concurrence is required.**

**(b) A request for Agency concurrence in approval of a proposed loan to
an ultimate recipient must include:**

**(1) Certification by the intermediary that:**

## 37

## (Revision 1)

(02-06-98) SPECIAL PN

RD Instruction 4274-D

§ 4274.361(b)(1) (Con.)

**(i) The proposed ultimate recipient is eligible for the loan;**

**(ii) The proposed loan is for eligible purposes;**

**(iii) The proposed loan complies with all applicable statutes and
regulations;**

**(iv) The ultimate recipient is unable to finance the proposed project
through commercial credit or other Federal, State, or local programs at
reasonable rates and terms; and**

**(v) The intermediary and its principal officers (including immediate
family) hold no legal or financial interest or influence in the ultimate
recipient, and the ultimate recipient and its principal officers
(including immediate family) hold no legal or financial interest or
influence in the intermediary except the interest and influence of a
cooperative member when the intermediary is a cooperative;**

**(2) For projects that meet the criteria for a Class I or Class II
environmental assessment or environmental impact statement as provided
in subpart G of part 1940 of this title, a completed and executed
request for environmental information on a form provided by the Agency**
*(Form RD 1940-20)***;**

**(3) All comments obtained in accordance with § 4274.337(a), regarding
intergovernmental consultation;**

**(4) Copies of sufficient material from the ultimate recipient\'s
application and the intermediary\'s related files, to allow the Agency
to determine the:**

**(i) Name and address of the ultimate recipient;**

**(ii) Loan purposes;**

**(iii) Interest rate and term;**

**(iv) Location, nature, and scope of the project being financed;**

**(v) Other funding included in the project; and**

**(vi) Nature and lien priority of the collateral.**

**(5) Such other information as the Agency may request on specific
cases.**

## 38

## (Revision 1) 

## RD Instruction 4274-D

§ 4274.361 (Con.)

*(c) Upon receipt of a request for concurrence in a loan to an ultimate
recipient from Agency IRP loan funds the Agency will:*

*(1) Review the material required by paragraph (b) of this section for
completeness and compliance with regulations;*

*(2) Complete an environmental review in accordance with\
RD Instruction 1940-G, including public notice requirements and
provisions for mitigation measures as appropriate. This review will be
conducted by the Agency in the same manner it would be conducted if the
Agency were considering a direct loan to the ultimate recipient. The
results of the environmental review will be used by the Agency in making
its decision on the request for loan concurrence;*

*(3) Consider any comments received through the intergovernmental
consultation process in accordance with RD Instruction 1940-J;*

*(4) When all requirements have been met, issue a letter concurring in
the loan; and*

*(5) If the Agency determines it is unable to concur in the loan, the
intermediary will be notified in writing and given the reasons for
denial.*

*(d) Requests for concurrence in a loan to an ultimate recipient and all
directly related material should be filed in four or eight position
continuation folders with one folder position devoted to each ultimate
recipient.*

*(e) Current regulations do not allow the intermediary to sell their
ultimate recipient loans. (Added 08-19-05, SPECIAL PN.)*

**§§ 4274.362 - 4274.372 \[Reserved\]**

**§ 4274.373 [Appeals]{.underline}.**

**Any appealable adverse decision made by the Agency which affects the
intermediary may be appealed in accordance with USDA appeal regulations
found at 7 CFR part 11.**

**§§ 4274.374 - 4274.380 \[Reserved\]**

## 39

## (Revision 2)

(02-06-98) SPECIAL PN

RD Instruction 4274-D

**§ 4274.381 [Exception authority]{.underline}.**

**The Administrator may, in individual cases, grant an exception to any
requirement or provision of this subpart which is not inconsistent with
any applicable law, provided the Administrator determines that
application of the requirement or provision would adversely affect
USDA's interest.** *Requests for exceptions must be in writing by the
State Director. Requests must be supported with documentation to explain
the adverse effect on the Agency's interest, propose alternative courses
of action, and show how the adverse effect will be eliminated or
minimized if the exception is granted.*

*§ 4274.382 [Exhibits]{.underline}.*

*The following documents may be used in connection with this subpart;*

*(a) Exhibit A, "Checklist - Intermediary Relending Program Loan to
Intermediary."*

*(b) Exhibit B, "Checklist - Intermediary Relending Program Loan to
Ultimate Recipient."*

*(c) Exhibit C, "Priority Scoresheet."*

*(d) Exhibit D, "Sample Loan Agreement Amendment."\
(Added 08-05-98, PN 294.)*

**§§ 4274.383 - 4274.399 \[Reserved\]**

**§ 4274.400 [OMB control number]{.underline}.**

**The reporting and recordkeeping requirements contained in this
regulation have been approved by the Office of Management and Budget
under the provisions of 44 U.S.C. chapter 35 and have been assigned OMB
control number 0570-0021 in accordance with the Paperwork Reduction Act
of 1995 (44 U.S.C. 3507).**

*Attachments: Exhibits A, B, C and D.*

o0o

40

(Revision 2)

RD Instruction 4274-D

Exhibit A

Page 1

*CHECKLIST*

*INTERMEDIARY RELENDING PROGRAM LOAN TO INTERMEDIARY*

*Intermediary:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*Loan Processing*

*Item Document/Action Form/Reference/Comments*

*No.*

*1 Application For Loan Form RD 4274-1*

*(Intermediary Relending*

*Program)*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*2 Work Plan* § *4274.343(a)(2)*

*\[Work plans should address the following items:*

*Ability to administer/personnel \_\_\_\_*

*Financial resources\_\_\_\_\_*

*Need for funds\_\_\_\_\_*

*Fees and charges\_\_\_\_\_*

*Commitments of financial support\_\_\_\_\_*

*Record of obtaining funds\_\_\_\_\_*

*Detailed relending plans\_*

*Goals, strategies, anticipated outcome\_\_\_\_\_\_\_\_*

*Technical assistance\_\_\_\_\]*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*3 Request for Environmental*

*info. (if applicable) Form RD 1940-20*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*4 Intergovernmental comments* § *4274.343(a)(4)*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*5 Financial statements* § *4274.343(a)(5)*

*and projections*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*6 Audit agreement § 4274.343(a)(6)*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*7 Assurance Agreement Form RD 400-4*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*8 Organizational documents § 4274.343(a)(8)*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*9 Other credit documentation § 4274.343(a)(9)*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

(02-06-98) SPECIAL PN

RD Instruction 4274-D

Exhibit A

Page 2

*Loan Processing (Con.)*

*Item Document/Action Form/Reference/Comments*

*No.*

*10 Audit report, if available § 4274.343(a)(10)*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*11 Applicant Certification Form RD 1910-11*

*Federal Collection policies*

*for Consumer or Commercial*

*Debt*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*12 Certification Regarding Form AD-1047*

*Debarment, Suspension, and*

*Other Responsibility Matters*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*13 Certification regarding Exhibit A-1 to RD*

*lobbying Instruction 1940-Q*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*14 IRP Project Summary Form RD 1948-2*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*15 Environmental Assessment Exh. H to RD*

*Instruction 1940-G*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*16 Priority Scoresheet Exh. C to this*

*Instruction*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*17 Allocation of funds Call/Memo from*

*National Office*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*18 Letter of Conditions* § *4274.350*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*19 Letter of Intent to Form RD 1942-46*

*Meet Conditions*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*20 Request for Obligation Form RD 1940-1*

*of Funds*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*21 LPAS Report RD Inst. 2015-C*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

RD Instruction 4274-D

Exhibit A

Page 3

*Loan Closing*

*Item Document/Action Form/Reference/Comments*

*No.*

*1 Request for closing* § *4274.356(e)*

*instructions*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*2 Promissory Note Form RD 4274-3*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*3 Loan Agreement Form RD 4274-4*

*or Form RD 4274-5*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*4 Collateral documents § 4274.356(c)*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*5 Revolving Fund Agreement* § *4274.356(c)*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*6 Other*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*7 Receipt of closing* § *4274.356)(e)*

*instructions
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*8 Certification, no change* § *4274.356(a)(1)*

*in work plan*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*9 Certification, letter* § *4274.356(a)(2)*

*of conditions*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*10 Certification, adverse* § *4274.356(a)(3)*

*change*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*11 Fidelity bond coverage* § *4274.338(a)(7)(v)*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*12 Post closing, OGC* § *4274.356(h)*

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*oOo*

(02-06-98) SPECIAL PN

RD Instruction 4274-D

Exhibit B

*CHECKLIST*

*ITERMEDIARY RELENDING PROGRAM LOAN TO ULTIMATE RECIPIENT*

*INTERMEDIARY:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*ULTIMATE RECIPIENT:*

*NAME:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*LOCATION:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*TYPE OF BUSINESS:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*USE OF FUNDS:*

*PURPOSE IRP FUNDS OTHER FUNDS*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_\_\_*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_\_\_*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_\_\_*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_\_\_*

*\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_\_\_*

*TOTAL \_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_\_\_*

*SOURCE OF OTHER
FUNDS:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*SECURITY:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*INTEREST RATE: \_\_\_\_\_\_\_\_\_\_ TERM:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*INTERGOVERNMENTAL REVIEW COMMENTS: RECEIVED? \_\_\_\_\_*

*ADVERSE COMMENTS? \_\_\_\_\_ (if yes, attach explanation)*

*ENVIRONMENTAL REVIEW: COMPLETED? \_\_\_\_\_\_\_*

*LEVEL: Exclusion\_\_\_ Class I\_\_\_\_ Class II\_\_\_\_*

*DETERMINED NO SIGNIFICANT ADVERSE IMPACT? \_\_\_\_*

*CERTIFICATIONS BY INTERMEDIARY (*§ *4274.361(a)(2)):*

*Eligible recipient\_\_\_\_\_, Eligible purpose\_\_\_\_\_,*

*Complies with statutes and regulations\_\_\_\_\_, Other
credit\_\_\_\_\_,\
No conflict of interest\_\_\_\_\_.*

*o0o*

(02-06-98) SPECIAL PN

RD Instruction 4274-D

Exhibit C

*PRIORITY SCORESHEET*

*Applicant:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*State:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*List the maximum points the applicant is eligible for in each category,
in accordance with* § *4274.344(c) of this Instruction.*

*(1) Other Funds:*

*(i) Outside loan and grant funds.*

*Percent\_\_\_\_\_ Points\_\_\_\_\_*

*(ii) Intermediary funds.*

*Percent\_\_\_\_\_ Points\_\_\_\_\_*

*Total other funds points (Max.
25)\...\...\...\...\...\...\...\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*(2) Employment:*

*(i) Updated median household income, service area\_\_\_\_\_\_*

*Poverty line, family of four \_\_\_\_\_\_\_\_\_*

*Percent\_\_\_\_\_ Points\_\_\_\_\_*

*(ii) Income within State.*

*Percent\_\_\_\_\_ Points\_\_\_\_\_*

*(iii) Unemployment rate, service area\_\_\_\_\_*

*Unemployment rate, National\_\_\_\_\_*

*Percent\_\_\_\_\_ Points\_\_\_\_\_*

*(iv) Low-income families*

*Percent Points\_\_\_\_\_*

*(v) Underrepresented groups*

*Percent\_\_\_\_\_ Points\_\_\_\_\_*

*(vi) Outmigration*

*Percent\_\_\_\_\_ Points\_\_\_\_\_*

*Total employment points
(Max.90)\...\...\...\...\...\...\...\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

(02-06-98) SPECIAL PN

RD Instruction 4274-D

Exhibit C

Page 2

*(3) Intermediary contribution:*

*Percent\_\_\_\_\_ Points (Max.
50)\...\....\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*(4) Experience:*

*Years\_\_\_\_\_ Points (Max.
30)\...\....\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*(5) Community representation:*

*Percent\_\_\_\_\_ Points (Max.
15)\...\....\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*(6) Administrative: Points (Max.
35)\...\....\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*TOTAL
POINTS\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

## oOo 

RD Instruction 4274-D

Exhibit D

## 

## 

## *SAMPLE LOAN AGREEMENT AMENDMENT*

## 

## 

*This amends the loan agreement executed by the ([insert name of
intermediary)]{.underline} and the United States Department of
Agriculture (USDA) on ([insert date of original loan
agreement)]{.underline} for an Intermediary Relending Program (IRP) Loan
in the amount of [(insert original amount of IRP loan]{.underline}).*

*Effective from this date forward, the loan referenced above will be
covered by and serviced according to the rules and regulations governing
the IRP (as they may be amended) located at 7 CFR part 4274, subpart D,
and such regulations will, for the above referenced loan, supersede the
regulations governing the IRP located at 7 CFR 1948, subpart C, that
were in effect when the original loan agreement was signed. Any
provisions of the loan agreement in conflict with the later regulation
are hereby amended to conform to such regulation.*

*[INTERMEDIARY]{.underline}*

*([INSERT NAME OF INTERMEDIARY]{.underline})*

*BY:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*([INSERT PRINTED OR TYPED NAME)]{.underline}*

*TITLE:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*DATE: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*[USDA]{.underline}*

*BY:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*([INSERT PRINTED OR TYPED NAME]{.underline})*

*TITLE:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*DATE: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

## oOo

(08-05-98) PN 294