§ 4279.161 Filing preapplications and applications. Borrowers and lenders are encouraged to file preapplications and obtain Agency comments before completing an application. However, if they prefer, borrowers and lenders may file a complete application without filing a preapplication. The Agency will neither accept nor process preapplications and applications unless a lender has agreed to finance the proposal. For borrowers other than individuals, a Unique Entity Identifier (UEI) is required. Instructions for obtaining the UEI are available at *https://sam.gov/ .* Guaranteed loans exceeding $600,000 must be submitted under the requirements specified in paragraph (b) of this section. However, guaranteed loans of $600,000 and less may be submitted under the requirements of either paragraph (b) or (c) of this section. ( a ) *Preapplications.* Lenders may file preapplications by submitting the following to the Agency: ( 1 ) A letter or preliminary lender credit analysis, signed by the lender, containing the following: ( i ) Name of the proposed borrower, organization type, address, contact person, Federal tax identification number, email address, and telephone number;
( ii ) Name of the proposed lender, address, telephone number, contact person, email address, and lender's Internal Revenue Service (IRS) identification number;
( iii ) Amount of the loan request, percent of guarantee requested, and the proposed rates and terms;
( iv ) Description of collateral to be offered with estimated value(s) and the amount and source of equity to be contributed to the project;
( v ) A brief description of the project, products or services provided, and availability of raw materials and supplies; and
( vi ) The number of current full-time equivalent jobs, the number of jobs to be created as a result of the proposed loan, and the overall average wage rate.
( 2 ) The borrower's current (not more than 90 days old) balance sheet and year-to-date income statement. For existing businesses, also include balance sheets and income statements for the last 3 years; and
( 3 ) A completed Form RD 4279-2, “Certification of Non-Relocation and Market Capacity Information Report,” if the proposed loan is in excess of $1 million and will increase direct employment by more than 50 employees.
( b ) *Applications.* Lenders must submit the information specified in paragraphs (b)(1) through (19) of this section when filing an application with the Agency. ( 1 ) A completed Form RD 4279-1.
( 2 ) A completed Form RD 4279-2, if the proposed loan is in excess of $1 million and will increase direct employment by more than 50 employees, unless already submitted in accordance with § 4279.161(a)(3).
( 3 ) Environmental review documentation in accordance with 7 CFR part 1970, “Environmental Policies and Procedures,” or successor regulation.
( 4 ) A personal or commercial credit report from an acceptable credit reporting company for each individual or entity owning 20 percent or more interest in the borrower, except for those corporations listed on a major stock exchange. Credit reports are not required for elected and appointed officials when the applicant is a public body or non-profit corporation.
( 5 ) Commercial credit reports for the borrower(s) and any parent, affiliate, and subsidiary companies.
( 6 ) Current (not more than 90 days old) financial statements for any parent, affiliate, and subsidiary companies.
( 7 ) Current (not more than 90 days old) personal and corporate financial statements of any guarantors.
( 8 ) For all borrowers, a current (not more than 90 days old) balance sheet and year-to-date income statement, a pro forma balance sheet projected for loan closing, and projected balance sheets, income statements, and cash flow statements for the next 2 years. Projections must be prepared in line with GAAP standards and supported by a list of assumptions showing the basis for the projections. In the event processing of the loan is not complete within 90 days, a current set of financial statements will be required every 90 days.
( 9 ) For borrowers that are existing businesses, balance sheets and income statements for the last 3 years. If the business has been in operation for less than 3 years, balance sheets and income statements for all years for which financial information is available.
( 10 ) The lender's comprehensive, written credit analysis of the proposal, as described in § 4279.131.
( 11 ) A draft loan agreement. A final loan agreement must be executed by the lender and borrower before the Agency issues a Loan Note Guarantee and must contain any additional requirements imposed by the Agency in its Conditional Commitment. The loan agreement must establish prudent, adequate controls to protect the interests of the lender and Agency. At a minimum, the following requirements must be included in the loan agreement: ( i ) Type and frequency of borrower and guarantor financial statements to be required for the duration of the loan;
( ii ) Prohibition against assuming liabilities or obligations of others;
( iii ) Limitations on dividend payments and compensation of officers and owners;
( iv ) Limitation on the purchase and sale of equipment and other fixed assets;
( v ) Restrictions concerning consolidations, mergers, or other circumstances and a limitation on selling the business without the concurrence of the lender;
( vi ) Maximum debt-to-net worth ratio; and
( vii ) Minimum debt service coverage ratio.
( 12 ) Intergovernmental consultation comments in accordance with 2 CFR part 415, subpart C, or successor regulation, unless exemptions have been granted by the State single point of contact.
( 13 ) Appraisals, accompanied by a copy of the appropriate environmental site assessment, if available, and the technical review of the appraisals required by § 4279.144(a).
( 14 ) A business plan or similar document that must include a description of the business and project; management experience; sources of capital; products, services, and pricing; marketing plan; proposed use of funds; availability of labor, raw materials, and supplies; contracts in place; distribution channels; and the names of any corporate parent, affiliates, and subsidiaries with a description of the relationship. A business plan may be omitted if the information is included in a feasibility study. A business plan may also be omitted when loan proceeds are used exclusively for debt refinancing and fees.
( 15 ) Independent feasibility study, if required.
( 16 ) For companies listed on a major stock exchange or subject to the Securities and Exchange Commission regulations, a copy of SEC Form 10-K, “Annual Report Pursuant to sections 13 or 15(d) of the Securities Exchange Act of 1934.”
( 17 ) For health care facilities, a certificate of need, if required by statute or State law.
( 18 ) For guaranteed loan applications for five or more residential units, including nursing homes and assisted-living facilities, an Affirmative Fair Housing Marketing Plan that is in conformance with 7 CFR 1901.203(c)(3).
( 19 ) Any additional information required by the Agency to make a decision, including any information needed to score the project in accordance with § 4279.166.
( c ) *Applications of $600,000 and less.* Guaranteed loan applications may be processed under this paragraph if the request does not exceed $600,000, provided the Agency determines that there is not a significant increased risk of a default on the loan. A lender may need to resubmit an application under paragraph (b) of this section if the application under this paragraph does not contain sufficient information for the Agency to make a decision to guarantee the loan. Applications submitted under this paragraph must include the information contained in paragraphs (b)(1) (with the short application box marked at the top of Form RD 4279-1), (b)(3), (b)(8) through (10), (b)(12), and (b)(13) of this section. The lender must have the documentation identified in paragraph (b) of this section, with the exception of paragraph (b)(2), available in its file for review.
[81 FR 36005, June 3, 2016, as amended at 89 FR 34958, May 1, 2024]