489 
‘‘(iii) NOTIFICATION.—Not later than 
60 days after funds become available re-
garding each pending application, the Sec-
retary shall notify the applicant of the ap-
proval or disapproval of funding for the 
application. 
‘‘(4) APPROVALS ON APPEAL.—If an application 
for a loan or loan guarantee under this subtitle is 
disapproved by the Secretary, but that action is sub-
sequently reversed or revised as the result of an ap-
peal within the Department or to the courts of the 
United States and the application is returned to the 
Secretary for further consideration, the Secretary 
shall act on the application and provide the appli-
cant with notice of the action not later than 15 days 
after the date of return of the application to the 
Secretary. 
‘‘(5) PROVISION OF PROCEEDS.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), if an application for a guar-
anteed loan under this subtitle is approved by 
the Secretary, the Secretary shall provide the 
loan proceeds to the applicant not later than 15 
days (or such longer period as the applicant 
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may approve) after the application for the loan 
is approved by the Secretary. 
‘‘(B) LACK OF FUNDS.—If the Secretary is 
unable to provide the loan proceeds to the ap-
plicant during the 15-day period described in 
subparagraph (A) because sufficient funds are 
not available to the Secretary for that purpose, 
the Secretary shall provide the loan proceeds to 
the applicant as soon as practicable (but in no 
event later than 15 days unless the applicant 
agrees to a longer period) after sufficient funds 
for that purpose become available to the Sec-
retary. 
‘‘SEC. 3407. GRADUATION OF BORROWERS. 
‘‘(a) GRADUATION
OF SEASONED DIRECT LOAN 
BORROWERS TO THE LOAN GUARANTEE PROGRAM.— 
‘‘(1) REVIEW OF LOANS.— 
‘‘(A) IN GENERAL.—The Secretary, or a 
contracting third party, shall annually review 
under section 3420 the loans of each seasoned 
direct loan borrower. 
‘‘(B) ASSISTANCE.—If, based on the re-
view, it is determined that a borrower would be 
able to obtain a loan, guaranteed by the Sec-
retary, from a commercial or cooperative lender 
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at reasonable rates and terms for loans for 
similar purposes and periods of time, the Sec-
retary shall assist the borrower in applying for 
the commercial or cooperative loan. 
‘‘(2) PROSPECTUS.— 
‘‘(A) IN
GENERAL.—In accordance with 
section 3422, the Secretary shall prepare a pro-
spectus on each seasoned direct loan borrower 
determined eligible to obtain a guaranteed loan. 
‘‘(B) 
REQUIREMENTS.—The 
prospectus 
shall contain a description of the amounts of 
the loan guarantee and interest assistance that 
the Secretary will provide to the seasoned direct 
loan borrower to enable the seasoned direct loan 
borrower to carry out a financially viable farm-
ing plan if a guaranteed loan is made. 
‘‘(3) VERIFICATION.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
provide a prospectus of a seasoned direct loan 
borrower to each approved lender whose lending 
area includes the location of the seasoned direct 
loan borrower. 
‘‘(B) NOTIFICATION.—The Secretary shall 
notify each borrower of a loan that a prospectus 
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has been provided to a lender under subpara-
graph (A). 
‘‘(C) CREDIT
EXTENDED.—If the Sec-
retary receives an offer from an approved lend-
er to extend credit to the seasoned direct loan 
borrower under terms and conditions contained 
in the prospectus, the seasoned direct loan bor-
rower shall not be eligible for a loan from the 
Secretary under chapter 1 or 2, except as other-
wise provided in this section. 
‘‘(4) INSUFFICIENT ASSISTANCE OR OFFERS.— 
If the Secretary is unable to provide loan guarantees 
and, if necessary, interest assistance to the seasoned 
direct loan borrower under this section in amounts 
sufficient to enable the seasoned direct loan bor-
rower to borrow from commercial sources the 
amount required to carry out a financially viable 
farming plan, or if the Secretary does not receive an 
offer from an approved lender to extend credit to a 
seasoned direct loan borrower under the terms and 
conditions contained in the prospectus, the Secretary 
shall make a loan to the seasoned direct loan bor-
rower under chapter 1 or 2, whichever is applicable. 
‘‘(5) INTEREST RATE REDUCTIONS.—To the ex-
tent necessary for the borrower to obtain a loan, 
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guaranteed by the Secretary, from a commercial or 
cooperative lender, the Secretary shall provide inter-
est rate reductions as provided for under section 
3413. 
‘‘(b) TRANSITION
TO PRIVATE COMMERCIAL
OR 
OTHER SOURCES OF CREDIT.— 
‘‘(1) IN GENERAL.—In making an operating or 
ownership loan, the Secretary shall establish a plan 
and promulgate regulations (including performance 
criteria) that promote the goal of transitioning bor-
rowers to private commercial credit and other 
sources of credit in the shortest period of time prac-
ticable. 
‘‘(2) COORDINATION.—In carrying out this sec-
tion, the Secretary shall integrate and coordinate the 
transition policy described in subsection (a) with— 
‘‘(A) the borrower training program estab-
lished by section 3419; 
‘‘(B) the loan assessment process estab-
lished by section 3420; 
‘‘(C) the supervised credit requirement es-
tablished by section 3421; 
‘‘(D) the market placement program estab-
lished by section 3422; and 
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