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.

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 ________________________________________________	

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)  				

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

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

     Form 7, include sales to both season and 

     Non-seasonal consumers)    								 	

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.