PROCEDURES FOR DETERMINING INTEREST RATE CATEGORY

		     (Pursuant to 7 CFR Parts 1710 and 1714)

THE THREE CATEGORIES APPLICABLE TO INSURED LOANS ARE AS FOLLOWS:

(1) FIVE PERCENT HARDSHIP RATE: This section allows qualifying under three methods: (A) standard eligibility requirements;(B) passing an extremely "high rates" test; and (C) the Administrator's Discretion.

 A.	Under the standard Eligibility Requirements, two tests must	be met (7 CFR 1714.8(1). They are outlined briefly:

(a) 	THE RATE DISPARITY TEST - There are two parts to this test as follows: (A) The avg. rev. per kWh of the borrower from ALL CONSUMERS is at least 20 percent above the average for ALL UTILITIES in the STATE; and, (B) The avg. rev. per kWh from residential consumers, both seasonal and non-seasonal, of the borrower is at least 20 percent above the avg. for ALL UTILITIES in the STATE.

(b)	THE CONSUMER INCOME TEST - This is an "Either/Or" situation where the borrow can meet this test "IF" (A) The avg. per capita income of its residential consumers is LESS than the avg. per capita income in the STATE; OR, (B) The median household income of its residential consumers is lower than the median household income in the STATE.

B.	HIGH RATES TEST: To qualify under the "extremely" High Rates Test, a borrower's residential revenue per kWh must exceed 15.0 cents per kWh as set forth in 7 CFR 1714.8 (b).

C.	ADMINISTRATOR'S DISCRETION: To seek this category, a borrower must follow the requirements in 7 CFR 1714.8(c).

(2)	MUNICIPAL RATE CAPPED AT 7 PERCENT, WITH OR WITHOUT THE CALL PROVISION.

To qualify under this section, the borrower can meet EITHER of two criteria:

(1)	Low Consumer Density Test: This test is met if the avg. number of consumers per mile is less than 5.50 (7CFR 1714.7(a);

OR,

(2)	The borrower meets BOTH (a) Rate Disparity Test and (b) a Consumer Income Test (7 CFR 1714.7(b).

(3) 	UNCAPPED MUNICIPAL RATE: Any application which does not qualify for a hardship rate loan or the interest rate cap shall be considered for an uncapped municipal rate loan.

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INFORMATIONAL  REQUIREMENTS  FOR

DETERMINING  BORROWER  ELIGIBILITY 

Before a loan application is submitted to RUS, a calculation is required to determine what category of loan for which you qualify, ie, 100% RUS hardship loan at 5%; 7% capped Municipal rate loan; or an uncapped Municipal rate loan.

Please provide the following information which will be used as input data in determining loan eligibility.

You may complete the information below and return to your RUS GFR.  The required information may be returned by mail, fax or Email.  Mailing, fax or Email address for the appropriate GFR may be found by accessing the RUS Webpage at www.usda.gov/rus/home/home.htm.

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NAME OF BORROWER ________________________________________________	

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Name of County Served  No. Of Res. Cons.    Name of County Served  No. Of Res. Cons.

 (1)								(7)							

 (2)								(8)							

 (3)								(9)							

 (4)								(10)							

 (5)								(11)							

 (6)								(12)							

B. DENSITY, Consumers per mile (From latest Form 7)  				

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C. AVERAGE REVENUE PER kWh (From year-end 1997 Form 7)			

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D. RESIDENTIAL REVENUE/kWh (From most recent year-end

     Form 7, include sales to both season and 

     Non-seasonal consumers)    									

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E. AVERAGE RESIDENTIAL REVENUE PER/kWh (From year-end

�     1997 Form 7)												

Thank you for your assistance in completing and returning this information. Please feel free to call if you have questions or wish to discuss with your GFR.