7 CFR Part 4280 — Loans and Grants

PART 4280—LOANS AND GRANTS Authority: 7 U.S.C. 1989(a), 5 U.S.C. 301, 7 U.S.C. 8107, 7 U.S.C. 2008s. Source: 70 FR 41303, July 18, 2005, unless otherwise noted. Subpart A—Rural Economic Development Loan and Grant Programs Source: 72 FR 29843, May 30, 2007, unless otherwise noted. § 4280.1 Purpose. The Rural Economic Development Loan (REDL) and Grant (REDG) Programs provide financing to eligible Rural Utilities Service (RUS) electric or telecommunications borrowers (Intermediaries) to promote rural economic development and job creation projects. § 4280.2 Policy. (a) REDL Program. (b) REDG Program. § 4280.3 Definitions. The following definitions are applicable to this subpart: Advanced Telecommunications. Agricultural Production. Business Incubator. Community Facilities Project. Conflict of interest. Cushion of Credit. Direct Job. Established Operation. Full-Time Job. Grant. Independent Provider. Indirect Job. Infrastructure. Intermediary. Part-Time Job. Programs. Project. REDG. REDL. Revolving Loan Fund (or Fund). Revolving Loan Fund Plan. Rural area. (1) A city or town that has a population of greater than 50,000 inhabitants; (2) The urbanized area contiguous and adjacent to such a city or town; and (3) Which excludes certain populations pursuant to 7 U.S.C. 1991(a)(13)(H) and (I). Rural Business-Cooperative Service (RBS). Rural Development. Rural Utilities Service (RUS). Seasonal Job. Start-Up Venture(s). State. Technical Assistance. Ultimate Recipient. Uniform Act. USDA. Zero-Interest Loan. [72 FR 29843, May 30, 2007, as amended at 79 FR 76015, Dec. 19, 2014; 80 FR 9913, Feb. 24, 2015; 80 FR 15885, Mar. 26, 2015; 87 FR 38644, June 29, 2022] §§ 4280.4-4280.12 [Reserved] § 4280.13 Applicant eligibility. Applicants that are not delinquent on any Federal debt or otherwise disqualified from participation in these Programs are eligible to apply. An applicant must be eligible under 7 U.S.C. 940c. § 4280.14 [Reserved] § 4280.15 Ultimate Recipient Projects eligible for Rural Economic Development Loan funding. An Intermediary may receive REDL funds only when it has a pre-approved Ultimate Recipient and Project that have an immediate need for the Zero-Interest Loan. REDL funds may only be used by the Intermediary to make a Zero-Interest Loan to the Ultimate Recipient to finance financially viable economic development or job creation Projects in a Rural Area. Funds may only be used to provide the following assistance: (a) Start-Up Venture costs, including, but not limited to financing fixed assets such as real estate, buildings (new or existing), equipment, or working capital; (b) Business expansion; (c) Business Incubators; (d) Technical Assistance; (e) Project feasibility studies; (f) Advanced Telecommunications services and computer networks for medical, educational, and job training services; (g) Other Projects eligible under § 4280.21; or (h) Community Facilities Projects. (i) A borrower is permitted to use up to 10 percent of the amount provided under this subpart to construct, improve, or acquire broadband infrastructure related to the project financed, subject to the requirements of 7 CFR part 1980, subpart M. [72 FR 29843, May 30, 2007, as amended at 85 FR 57085, Sept. 15, 2020] § 4280.16 REDL and REDG Loan terms. REDL and REDG loans made by the Intermediary are governed by the following terms: (a) The maximum term of a loan is 10 years, including any principal deferment period. The Intermediary may choose a shorter term if desired. (b) Deferments on Zero-Interest Loans will automatically be granted by Rural Development upon request of the Intermediary as follows: (1) A deferral for up to 1 year for Projects involving an Established Operation; or (2) A deferral for up to 2 years for Projects involving a Start-Up venture or a Community Facilities Project whether or not such Project also receives funding under USDA Community Facilities funding programs. (c) The Intermediary must provide the Ultimate Recipient with the same loan terms as the Intermediary receives from Rural Development. (d) The Intermediary is solely responsible for the financial approval of Fund loans and all other Fund decisions and actions. § 4280.17 Additional REDL terms. (a) The Intermediary is responsible for fully repaying the Zero-Interest Loan to RBS even if the Ultimate Recipient does not repay the Intermediary. (b) The Intermediary is responsible for remitting any partial or full payment to RBS at the time the Ultimate Recipient pays the Intermediary. (c) Unless deferred pursuant to § 4280.16(b) of this subpart, loan payments to Rural Development under the REDL Program are due monthly. (d) If the Intermediary does not have an outstanding loan with RUS, the Intermediary must immediately provide, as security for any REDL loan it receives, a Rural Development-approved irrevocable letter of credit that remains in effect until the loan is repaid. § 4280.18 [Reserved] § 4280.19 REDG Grants. Intermediaries receiving Grants must partially finance a Revolving Loan Fund that the Intermediary will operate and administer, by providing supplemental funds of at least 20 percent of the Grant. Grants are subject to 2 CFR parts 200, 400, 415, 417, 418, 421 as applicable. [79 FR 76015, Dec. 19, 2014] § 4280.20 [Reserved] § 4280.21 Eligible REDG Ultimate Recipients and Projects. The Intermediary may only make loans from the Revolving Loan Fund to entities located in a Rural area of a State. Eligible entities are as follows: (a) Non-profit entities, public bodies, or Federally-recognized Indian tribes Ultimate Recipients for: (1) Community development or Community Facility Projects that: (i) will create or save employment; and (ii) are open to and serve all Rural residents, and are owned by the Ultimate Recipient; (2) Business Incubators; (3) Facilities and equipment to provide education and training to residents of Rural Areas that will facilitate economic development; (4) Facilities and equipment to provide medical care to residents of Rural Areas. Equipment and facilities may be funded to enable eligible entities to provide medical training and related professional health care skills to rural health care providers; (5) Projects that utilize Advanced Telecommunications or computer networks to facilitate medical or educational services or job training; or (6) Project feasibility studies and Technical Assistance. A qualified Independent Provider must perform feasibility studies or Technical Assistance. (b) For-profit Ultimate Recipients for Projects under paragraphs (a)(3), (4), (5), or (6) of this section. § 4280.22 [Reserved] § 4280.23 Requirements for lending from Revolving Loan Fund. (a) Supplemental contribution. (b) Use of supplemental contribution. (c) REDG Zero-Interest Loan Requirements. (1) The contribution may be used to fund the same Project that Rural Development is funding. The interest rate on that portion of the financing using Rural Development funds will be at zero percent. The interest rate on that portion of the financing using the Intermediary's contribution may be greater than zero percent but must be less than, or equal to, the prevailing prime rate. Using this option, loan security and recovery of loan losses must provide for the pro rata recovery and distribution between the Intermediary and Rural Development based on the respective amounts of each contribution to the total loan amount for the Project. (2) The Intermediary's contribution may be used to fund Projects separate from the Project financed with Rural Development funds, provided that the Project is eligible in accordance with § 4280.21. (3) Whether the Intermediary chooses the option under paragraph (c)(1) or paragraph (c)(2) of this section, its contribution must be used to fund an eligible Project within 3 years from the date of the Grant agreement. If the Intermediary fails to use its contribution within this 3-year period, Rural Development will terminate the Grant. (d) Intermediary's supplemental funds. (e) Eligible purposes only. (f) Termination for cause. (g) All REDG Loans must be made to Rural Ultimate Recipients. [72 FR 29843, May 30, 2007, as amended at 79 FR 76015, Dec. 19, 2014] § 4280.24 Revolved funds. Rural Development and the Intermediary's supplemental funds will be considered revolved after they have been loaned to Ultimate Recipients and subsequently repaid. Loans made from revolved funds will not require prior approval of Rural Development for creditworthiness or environmental clearance purposes. All other Federal compliance requirements, including those in this subpart, remain in effect. § 4280.25 Revolving Loan Fund Plan. Each REDG Intermediary must adopt a Rural Development-approved plan that specifies that: (a) The initial loan made from the Fund will be at zero percent interest and have a maximum term of 10 years; (b) Loans made from loan repayments may carry an interest rate less than, or equal to, the prevailing prime rate. The Intermediary determines repayment terms and security arrangements on these loans. (c) Loans made from repayments of REDG loans must be for eligible Program purposes; (d) The Intermediary is solely responsible for the financial approval of Fund loans and all other Fund decisions and actions; and (e) No changes will be made to a Rural Development-approved Revolving Loan Fund Plan without the prior written approval of Rural Development. § 4280.26 Administration and operation of the Revolving Loan Fund. (a) The Intermediary will operate and administer the Revolving Loan Fund. The Intermediary may contract with a third party for administrative services regarding the Fund. However, the Intermediary must permanently retain all Project review, approval, and monitoring authority and responsibility. This authority and responsibility cannot be delegated to any other person or entity. (b) Up to 10 percent of Rural Development Grant funds may be applied toward operating expenses over the life of the Fund. Operating expenses include the costs of administering the Fund and Technical Assistance provided to Project owners by Independent Providers. (c) In cases where the Intermediary uses its supplemental contribution to the Revolving Loan Fund for a Project other than the Project that resulted in the Intermediary being awarded the Grant, the loan terms must not exceed 10 years and the interest rate must be less than, or equal to, the prevailing prime rate. § 4280.27 Ineligible purposes. Zero-Interest Loans may not be used: (a) For activities that would adversely affect the environment, or activities that limit the choice of reasonable alternatives prior to satisfying Rural Development environmental requirements; (b) To pay off or refinance any existing indebtedness or costs of the Project that were incurred prior to Rural Development receipt of the Intermediary's completed application; (c) For any electric or telecommunications purpose or for the Intermediary's electric or telecommunications operations, for affiliated operations of the Intermediary, or for the benefit of other Intermediaries or their affiliated operations, except those purposes contained in § 4280.15(f); (d) To pay the salaries of any employee or owner of the Intermediary, its subsidiaries, or affiliates, except for salaries incurred in administering a Revolving Loan Fund established under the REDG Program; (e) For community antenna or cable television systems or facilities; (f) For residential purposes such as residential dwellings and land sites; facilities to provide entertainment television; to transfer property between owners without making improvements that will promote or sustain economic development in Rural Areas; or for personal, non-business related vehicles; (g) Where there is directly or indirectly a conflict of interest or the appearance of a conflict of interest in the Project; for Intermediaries this would include a situation in which the Intermediary, its officers, managers, Board of Directors, employees, their spouses, children, or close relatives, have a financial or ownership interest in the Project being funded, including its construction or development; (h) For any purpose when receipt of loan funds is conditioned upon the requirement that the Ultimate Recipient acquire electric or telecommunications service from the Intermediary or its affiliates; (i) For any gambling activity; (j) For a Project that would result in the transfer of existing employment or business activity more than 25 miles from its existing location; (k) For proposed Projects located in areas covered by the Coastal Barrier Resources Act (16 U.S.C. 3501-3510); (l) For any illegal activity or any activity involving prostitution; (m) For Agricultural Production, except where the Project is a farmer-owned cooperative or similar organization where the benefits of the Project are passed on to the farmer-owners, and the Agricultural Production is part of an integrated business that processes the agricultural products, and the Agricultural Production portion of the loan will not exceed 50% of the loan amount; (n) For any pass-through Grant funding activity (a Grant by the Intermediary to the Ultimate Recipient); (o) Provision of only local exchange voice telephone service; or (p) for any other purpose announced in a notice by Rural Development. This will not affect Grants that have already been awarded. § 4280.28 [Reserved] § 4280.29 Supplemental financing required for the Ultimate Recipient Project. (a) For REDL loans, either the Ultimate Recipient or the Intermediary must provide supplemental funds for the Project equal to at least 20 percent of the loan to the Intermediary. For REDG grants, the Intermediary must provide supplemental funds, to capitalize the Revolving Loan Fund, equal to at least 20 percent of the Grant to the Intermediary. (b) Funds provided by the Ultimate Recipient must be: (1) Cash or its equivalent; (2) Provided after Rural Development receives the completed application; and (3) Disbursed for an eligible Project within a three year period that begins on the day the Intermediary signs the Grant agreement. (c) Satisfactory evidence of the Ultimate Recipient's funds must be provided to Rural Development before it will advance any funds to the Intermediary. § 4280.30 Restrictions on the use of REDL or REDG funds. (a) Conflict of interest. (b) Fees. (c) Interest earnings. [72 FR 29843, May 30, 2007, as amended at 79 FR 76015, Dec. 19, 2014] §§ 4280.31-4280.35 [Reserved] § 4280.36 Other laws that contain compliance requirements for these Programs. (a) Equal employment opportunity. (b) Equal opportunity and nondiscrimination. (c) Civil rights compliance. (d) Architectural barriers. (e) Uniform relocation assistance. (f) Drug-free workplace. et seq. (g) Debarment and suspension. (h) Intergovernmental review of Federal programs. (i) Restrictions on lobbying. (j) Earthquake hazards. (k) Environmental requirements. (l) Affirmative fair housing. (m) Flood hazard insurance. (n) Audits. [72 FR 29843, May 30, 2007, as amended at 79 FR 76015, Dec. 19, 2014; 81 FR 11052, Mar. 2, 2016] § 4280.37 Application forms and filing dates. (a) The Intermediary may obtain forms that supplement the written narrative sections of its application from the Rural Development State Office for the State where the Intermediary is located. (b) An original copy only of the application is to be filed with the Rural Development State Office. No other copies are required. § 4280.38 Maximum amount of loans or Grants. During any given fiscal year, Rural Development will publish an announcement of available loan and Grant funds and will indicate the maximum loan and Grant amounts for which an Intermediary or prospective Intermediary may apply. This announcement will also include contact information and application deadlines. All pending applications on file at RBS, including both loan and Grant applications, from the same Intermediary or prospective Intermediary for the same Project will be considered to be one application in determining that the maximum size of the application is in accordance with this section. § 4280.39 Contents of an application. An application for a loan or a Grant must contain the following: (a) Required forms and certifications: (1) Standard Form 424, “Application for Federal Assistance,” signed by an authorized representative of the Intermediary. (2) A Resolution of the Board of Directors signed by the directors and certified by the Intermediary's board secretary. The board resolution must indicate whether the Intermediary is requesting a loan or Grant, agree to the provisions of this subpart and the loan or Grant agreement including the Intermediary's 20 percent Fund contribution, and state that the Intermediary has the legal authority to enter into a loan or Grant agreement under these Programs; (3) Form AD 1047, “Certification Regarding Debarment, Suspension, and other Responsibility Matters—Primary Covered Transactions,” and Form AD-1048, “Certification Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion—Lower Tier Transactions.” (4) Assurance statement for the Uniform Act signed by the Ultimate Recipient. This statement provides Rural Development with the required assurance statement that any relocations of persons or acquisitions of real property, as part of completing the Ultimate Recipient Project, will be handled in accordance with this statute. (5) RD Instruction 1940-Q, Exhibit A-1, applies if the loan is greater than $150,000 or the Grant is greater than $100,000; (6) SF LLL, “Disclosure of Lobbying Activities,” (if the Intermediary or the Ultimate Recipient engages in lobbying activities); (7) Form AD 1049, “Certification Regarding Drug-Free Workplace Requirements,” for Grants only; (8) Seismic certification if construction of a building is proposed. The Project owner certifies that any building constructed will comply with standards that reduce the damage caused by earthquakes; (9) Environmental documentation in accordance with 7 CFR part 1970. (10) RUS Form 7, “Financial and Statistical Report” and RUS Form 7a “Investments, Loan Guarantees, and Loans,” or similar information. (b) A written narrative section must be provided. This section consists of the following: (1) A Project description, including details of the work to be performed with Rural Development funds, and a business plan, including a discussion of management and prior experience of the Ultimate Recipient. (2) A discussion of how the Project meets each selection factor in § 4280.42(b). (3) A Revolving Loan Fund Plan is required if the Intermediary is applying for a Grant to establish a Revolving Loan Fund. [72 FR 29843, May 30, 2007, as amended at 81 FR 11052, Mar. 2, 2016] § 4280.40 [Reserved] § 4280.41 Environmental review of the application. The Agency will review the environmental documentation in accordance with 7 CFR part 1970. Intermediaries will be informed by the Agency if additional information is required from the intermediary to complete the environmental review process. The environmental review process must be completed before the application can be considered for approval by the Agency. [81 FR 11052, Mar. 2, 2016] § 4280.42 Application evaluation and selection. (a) Rural Development will evaluate the application and score it based on the selection factors in this section. All applications will be ranked on a nationwide basis, based on the total points scored. (b) The application will be evaluated and scored using the information provided in accordance with § 4280.39(b)(2) of this subpart. (1) Nature of the Project. (i) Is a for-profit business, Business Incubator, industrial building or park, or an infrastructure connection project (such as streets or utilities)—20 points; (ii) Provides Technical Assistance to rural businesses or rural residents, or educates or provides medical care to rural residents—20 points; (iii) Will enhance rural economic development by providing Advanced Telecommunications services and computer networks for medical, educational, and job training services. This review will be based on the application's telecommunications design—20 points. (2) Number of direct full-time equivalent jobs created or saved within a 3-year period. If the number of Rural full-time equivalent direct-jobs jobs created or saved per $100,000 of total, Project cost is: Then Rural (i) Greater than five 25 points. (ii) From one to five 15 points. (3) Supplemental funds for the Project. If supplemental funds as a percentage of the Rural Development loan or grant to be provided to the Project are: Then Rural (i) Greater than 200% 20 points. (ii) From 100% to 200% 10 points. (iii) From 50% to less than 100% 5 points. (4) Unemployment rate for the county(ies) where the Project is physically located. If the unemployment rate(s) in the county(ies) where the Project will be located: Then Rural (i) Exceeds the national unemployment rate by 30% or more 15 points. (ii) Is greater than the national unemployment rate, but exceeds it by less than 30% 5 points. (iii) Exceeds the State unemployment rate by 30% or more 10 points. (iv) Is greater than the State unemployment rate but exceeds it by less than 30% 5 points. (5) Per capita personal income for the county(ies) where the Project is physically located. If the per capita personal income level in the county(ies) is: Then Rural (i) Less than or equal to 90% of the national level 15 points. (ii) Between 90 and 100% of the national level 5 points. (iii) Less than or equal to 90% of the State level 10 points. (iv) Between 90 and 100% of the State level 5 points. (6) Rural Area location. (ii) If the Project is physically located in an incorporated area having a population of 1,250 to 2500, Rural Development will award 10 points. (7) Decline in population for the county where the Project is physically located. (8) Cushion of Credit Payments. If the Intermediary's Cushion of Credit account level is: Then Rural (i) In excess of $300,000, or a dollar amount in excess of 3 percent of the Intermediary's total assets, whichever is less 15 points. (ii) Within the range of $100,000 to $299,999.99, or a dollar amount that is within the range of one percent to 2.99 percent of Intermediary's total assets, whichever is less 10 points. (iii) Within the range of $10,000 to $99,999.99, or a dollar amount that is within the range of 0.5 percent to .99 percent of Intermediary's total assets, whichever is less 5 points. (9) Initial loan and Grant. (10) County participation. (11) The business plan for the Applicant's Ultimate Recipient will be evaluated by Rural Development and must include: (i) A description of the business or Project plans, its management, and, if applicable, its products and operating plans. (The business plan evaluated by Rural Development for Advanced Telecommunications will be its telecommunications and engineering design)—up to 15 points; and (ii) An appropriate financial plan, including actual balance sheets and income statements covering the most recent 3-year period (for applicants who have been in business this long), and projected balance sheets, income statements, and cash flow statements for the ensuing 3-year period, supported by assumptions showing the basis for the projections—up to 20 points. [72 FR 29843, May 30, 2007, as amended at 80 FR 9913, Feb. 24, 2015] § 4280.43 Discretionary points. The RBS Administrator has the discretion to designate up to 25 points (no more than 5 points for each of the following elements) based on whether the Project: (a) Is located in a Rural Empowerment Zone, Rural Economic Area Partnership Zone, Rural Enterprise Community, or Champion Community; (b) Is located in a county that has experienced the loss, removal, or closing of a major source or sources of employment in the last 3 years which causes an increase of 2 percentage points or more in the county's most recent unemployment rate compared with the same period immediately before the dislocation; (c) Is located in a county that has experienced chronic or long-term economic deterioration; (d) Is located in a county that was designated a disaster area by the President of the United States that significantly affected rural economic development and job creation. The county must have been designated within 3 years prior to filing of the completed application with Rural Development; or (e) Is consistent with the Rural Development State Office's approved strategic plan and mission area objectives and is identified as a priority area for assistance in the States' plan. § 4280.44 Limitation on number of loans or Grants to an Intermediary. Depending on the amount of funds available, Rural Development may publish an announcement limiting an Intermediary to one selected Grant application and two selected loan applications in a fiscal year. §§ 4280.45-4280.46 [Reserved] § 4280.47 Non-selection of applications. Provided the application requirements have not changed, an application not selected will be reconsidered in 3 subsequent funding competitions for a total of four funding competitions. If an application is withdrawn, it can be resubmitted and will be evaluated as a new application. § 4280.48 Post selection period. Rural Development will notify the Intermediary in writing if the application is selected. The documents to be executed by the Intermediary will include: (a) For a loan: (1) A Letter of Conditions with Project-specific terms and conditions; (2) A loan agreement with general terms and conditions; (3) A note covering the repayment terms of the loan; and (4) A legal opinion concerning the authority of the Intermediary to engage in the Project. (b) For a Grant: (1) A Letter of Conditions with Project-specific terms and conditions; (2) A Grant agreement with general terms and conditions; and (3) A legal opinion concerning the authority of the Intermediary to participate in the Revolving Loan Fund and to engage in the Project. § 4280.49 [Reserved] § 4280.50 Disbursement of Zero-Interest Loan funds. (a) For a REDL loan, Rural Development will disburse Zero-Interest Loan funds to the Intermediary in accordance with the terms of the executed loan agreement. All loan funds will be disbursed either as an advance to the Intermediary, in multiple advances, or as a reimbursement for eligible project costs, once the Intermediary has complied with Rural Development requirements. (b) The Intermediary must provide to the Ultimate Recipient all loan funds that the Intermediary receives from Rural Development within one year of receiving them. If the Intermediary does not re-lend Rural Development funds within one year, the loan funds, and all interest earned on the loan funds, must be returned to the Agency. (c) For a REDG loan, Rural Development will disburse Grant funds to the Intermediary in accordance with 2 CFR 200 as adopted by USDA in 2 CFR part 400 as applicable. Specifically, Rural Development will disburse the Grant funds in advance if the following requirements are met: (1) The Intermediary has established written procedures that will minimize the time elapsing between the transfer of funds from Rural Development and their disbursement to the Ultimate Recipient; (2) The management system of the Intermediary meets the requirements of 2 CFR part 200 as adopted by USDA in 2 CFR part 400, as applicable; (3) All necessary supplemental funds for the Project have been obligated or committed to the Revolving Loan Fund; and (4) The requests for cash advances made by the Intermediary are limited to the minimum amounts needed and timed to be in accordance with the actual immediate cash needs of the Ultimate Recipient for carrying out the Project. [72 FR 29843, May 30, 2007, as amended at 79 FR 76015, Dec. 19, 2014] §§ 4280.51-4280.52 [Reserved] § 4280.53 Loan payments. The Intermediary must make all REDL payments to Rural Development by electronic funds transfer or other means as specified in the loan documents. § 4280.54 Construction procurement requirements. Construction, including bidding and awarding of contracts, must be conducted in a manner that provides maximum open and free competition. § 4280.55 Monitoring responsibilities. (a) The Intermediary must monitor the Project to ensure that: (1) Funds are used only for the approved purposes as specified in the legal documents; (2) Disbursements and expenditures of funds are properly supported with certifications, invoices, contracts, bills of sale, or other forms of evidence, which are maintained on the premises of the Intermediary; (3) Project time schedules are being met, projected work by time periods is being accomplished, and other performance objectives are being achieved; and (4) The Project is in compliance with all applicable regulations. (b) Rural Development may inspect and copy records and documents that pertain to the Project. The Intermediary must retain these records for the term of the Project loan plus 2 years. In addition, Rural Development may also perform Project site visits and reviews of the use of loan or Grant proceeds. (c) Rural Development will review and monitor Grants in accordance with 2 CFR part 200, as adopted by USDA in 2 CFR parts 400, 415, 417, 418, and 421 as applicable. [72 FR 29843, May 30, 2007, as amended at 79 FR 76015, Dec. 19, 2014] § 4280.56 Submission of reports and audits. (a) In addition to any reports and audits required by 2 CFR part 200 and subpart F as adopted by USDA in 2 CFR part 400, the Intermediary must submit the following monitoring reports to Rural Development: (1) Loan. (2) Grant (Revolving Loan Fund). (b) If the Intermediary does not have an existing loan with RUS, the Intermediary will submit a copy of its annual audit to Rural Development within 90 days of its completion. All REDL audits must be conducted in accordance with Generally Accepted Government Auditing Standards or Generally Accepted Accounting Principles and REDG audits in accordance with 2 CFR part 200 as adopted by USDA in 2 CFR part 400. (c) Rural Development may require Ultimate Recipients that receive loans financed with Grant funds provided under the REDG Program to submit annual audits to comply with Federal audit regulations. In accordance with 2 CFR part 200, as adopted by USDA in 2 CFR part 400, Ultimate Recipients that are nonprofit entities, or a State or local government, may be required to submit an audit subject to the threshold established in 2 CFR part 200, as adopted by in 2 CFR part 400. [72 FR 29843, May 30, 2007, as amended at 79 FR 76015, Dec. 19, 2014] §§ 4280.57-4280.61 [Reserved] § 4280.62 Appeals. An Intermediary may appeal any appealable adverse decision made by Rural Development that affects the Intermediary in accordance with 7 CFR part 11. § 4280.63 Exception authority. Except as specified in paragraphs (a) through (c) of this section, the RBS Administrator may, on a case-by-case basis, make exceptions to any requirement or provision of this subpart, if such exception is necessary to implement the intent of the authorizing statute in a time of national emergency or in accordance with a Presidentially-declared disaster, or when such an exception is in the best interests of the Federal Government and is otherwise not in conflict with applicable law. (a) Applicant eligibility. (b) Project eligibility. (c) Rural area definition. §§ 4280.64-4280.99 [Reserved] § 4280.100 OMB control number. The information collection requirements contained in this regulation have been approved by the Office of Management and Budget (OMB) and have been assigned OMB control number 0575-0035. A person is not required to respond to this collection of information unless it displays a currently valid OMB control number. Subpart B—Rural Energy for America Program—Grants for Renewable Energy Systems and Energy Efficiency Improvements Source: 91 FR 62612, Oct. 1, 2026, unless otherwise noted. § 4280.101 Purpose. This subpart contains the procedures and requirements for providing financial assistance under the Rural Energy for America Program (REAP) through grants to purchase and install a Renewable Energy System (RES) or make Energy Efficiency Improvements (EEI). § 4280.102 Organization of subpart. The information in this subpart is organized into six main topics. (a) General information. (b) Eligibility information. (c) Application requirements information. (d) Application processing information. (e) Award information. (f) Post-award information. (g) Other. (2) Section 4280.199 includes the Office of Management and Budget (OMB) control number for reporting and recordkeeping requirements under this subpart. § 4280.103 Acronyms. (a) BESS Battery Energy Storage System. (b) BTU British Thermal Unit. (c) CFR Code of Federal Regulations. (d) COI Conflict of Interest. (e) CSP Concentrated Solar Power. (f) EA Energy Audit. (g) EEI Energy Efficiency Improvement. (h) EV Electric Vehicle. (i) FAA Financial Assistance Agreement. (j) FFY Federal Fiscal Year. (k) kW Kilowatts. (l) kWh Kilowatt-Hours. (m) LCFS Low Carbon Fuel Standard. (n) LOC Letter of Conditions. (o) MW Megawatts. (p) MWh Megawatt-Hours. (q) PV Photovoltaic. (r) RES Renewable Energy System. (s) RIN Renewable Identification Number (as issued under the Renewable Fuels Standard Program). (t) SAM System for Award Management. (u) UEI Unique Entity Identifier. (v) U.S.C. United States Code. (w) USDA United States Department of Agriculture. § 4280.104 Definitions. These are the definitions for terms used in this subpart. All defined terms used in this subpart are capitalized. Agency Agricultural commodity Agricultural producer (1) A tribal corporation or other business entity wholly owned by an Indian Tribe. (2) 100 percent ownership by an individual or an individual and their Immediate Family. Anaerobic digester Ancillary infrastructure Annual energy production e.g., Applicant Battery energy storage system (BESS) Bioenergy project Biogas Byproduct Commercially available (1) Has both a proven and reliable operating history and proven performance data for at least one year specific to the operation and use, including the specific feedstock used and specific process used to create or save energy. The history and data must be obtained from another source than the Applicant's use of the RES or EEI for the Project. (2) Is based on established design and installation procedures and practices and is replicable. (3) Has professional service providers, trades, large construction Equipment providers, and laborers who are familiar with installation procedures and practices. (4) Has proprietary and balance of system Equipment and spare parts that are readily available. (5) Has service that is readily available to properly maintain and operate the system. (6) Has an existing established warranty that is valid in the United States for major parts and labor. Cost sharing Cropland Distribution components (1) Energy produced by a Renewable Energy System from its point of generation to the initial point of sale; or (2) Inputs or feedstocks to a Renewable Energy System. This includes Equipment and systems that utilize Renewable Energy for upstream applications, regardless of ownership by an entity other than the original energy producer. End user Energy assessment Energy assessor Energy audit (EA) Energy auditor (1) An Energy Auditor certified by the Association of Energy Engineers; (2) An energy manager certified by the Association of Energy Engineers; (3) A licensed professional engineer in the State in which the audit is conducted who has at least one year of experience and who has completed at least two similar Energy Audits; or (4) An individual with a four-year engineering or architectural degree who has at least three years of experience and who has completed at least five similar Energy Audits. Energy efficiency improvement (EEI) Equipment Existing business Farm or Ranch Feasibility study Federal award Federal fiscal year Financial assistance agreement (FAA) For-profit organization Geothermal direct generation system Geothermal electric generation system Geothermal source Highest-level owner Hybrid system Hydroelectric system Hydrogen system Immediate family Indian Tribe Inspector Interconnection agreement Key service providers Kilowatt (kW) Kilowatt-hour (kWh) Letter of conditions (LOC) Local Government Megawatt (MW) Megawatt-hour (MWh) Metering agreement Ocean energy e.g., Off-grid system Period of performance Project period means Power purchase agreement Principals (1) Individuals or Indian Tribe who own the Applicant; (2) Individuals who are responsible for handling Federal funds associated with the Project; and (3) Individuals who are responsible for overseeing the Project (for example, the Executive Director, or individual who has signature authority for the Applicant). Project Project cost Ranch Rated system size Real property Recipient Refurbished Renewable biomass (1) Materials, pre-commercial thinnings, or invasive species from National Forest System land or public lands (as defined in section 104 of the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1702)) that: (i) Are Byproducts of preventive treatments that are removed to reduce hazardous fuels; to reduce or contain disease or insect infestation; or to restore ecosystem health; (ii) Would not otherwise be used for higher-value products; and (iii) Are harvested in accordance with applicable law and land management plans and the requirements for old-growth maintenance, restoration, and management direction of paragraphs (2), (3), and (4) of subsection (e) of section 102 of the Healthy Forests Restoration Act of 2003 (16 U.S.C. 6512) and large-tree retention of subsection (f) of section 102; or (2) Any organic matter that is available on a renewable or recurring basis from non-Federal land or land belonging to an Indian or Indian Tribe that is held in trust by the United States or subject to a restriction against alienation imposed by the United States, including the following items: (i) Renewable plant material (including feed grains; other agricultural commodities; other plants and trees; and algae); and (ii) Waste material including crop residue; other vegetative waste material (including wood waste and wood residues); animal waste and Byproducts (including fats, oils, greases, and manure); and food waste and yard waste. Renewable energy (1) A wind, solar, Renewable Biomass, ocean (including tidal, wave, current, and thermal), geothermal or hydroelectric source; or (2) Hydrogen derived from Renewable Biomass or water using an energy source described in paragraph (1) in this definition. Renewable energy system (RES) (1) May include Distribution Components necessary to move energy produced by such a system to initial point of sale; and (2) May include other components and Ancillary Infrastructure of such system, such as a storage system. (3) Does not include a mechanism for dispensing energy at retail. (4) Is divided into four subcategories under this subpart: (i) Energy replacement systems are those that replace 120 percent or less of the annual energy use prior to installation of the RES, where annual energy use is calculated using the 12 months prior to installation. (ii) Energy generation systems are those that produce energy in excess of 120 percent of annual energy use prior to installation of the RES, where annual energy use is calculated using the 12 months prior to installation. (iii) Retrofitting an existing RES. (iv) Distribution Components and Ancillary Infrastructure as part of an RES. Resource assessment Retrofitting (1) Installing a feedstock pre-treater on an existing biodiesel production plant; (2) Installing a steam turbine at an ethanol plant; or (3) Taking an existing wind turbine and installing newly designed blades to enhance energy production; Rural or Rural area Rural small business. Simple payback (1) RES Simple Payback = (Project Cost) ÷ (dollar value of energy units replaced, credited, sold, or used and fair market value of Byproducts as applicable in a typical year). (i) The value of energy replaced will be calculated based on the Applicant's historical energy consumption with actual average price paid for the energy replaced, as documented by 12 consecutive months of utility bills prior to the installation of the system. For the average price paid, the following charges must be excluded: fixed meter charge, demand charges, subsidy charges, and sales tax. In the case of Off-Grid Systems, the historical energy consumption must be documented through a written statement from the utility company that services the Project location that identifies the average price per kW hour for the 12-month period prior to installation. (ii) The value of energy credited or sold will be calculated based on the amount of energy units to be credited or sold at the actual rate per unit, as documented in utility net metering or crediting policies and/or a Power Purchase Agreement. (iii) The value of Byproducts produced by and used in the project or related enterprises must be documented at the fair market value to be received for the Byproducts in a typical year. (iv) The calculation does not include any one-time benefits such as, but not limited to, construction and investment-related benefits, nor credits which do not provide annual income to the project, such as tax credits. (2) EEI Simple Payback = (Project Cost) ÷ (dollar value of energy saved). (i) Energy saved will be determined by subtracting the actual energy consumed from the historical energy consumed and converting the result to a monetary value using a constant value or price of energy. (A) Actual energy used in the original building and/or Equipment, as applicable, prior to the EEI Project, must be based on the actual average annual total energy used in British thermal units (BTU) over the most recent 12, 24, 36, 48, or 60 consecutive months of operation, as documented in utility bills and summarized in the Energy Audit or Energy Assessment. (B) Actual energy use after the EEI project has been in place for the original building and/or Equipment, as applicable, for 12 months post-installation of the EEI Project, to include the same input and output conditions. (C) Value or price of energy must be the actual average price paid over the same time period used to calculate the actual energy used. When calculating the actual average price of energy, only include energy charges directly reduced by the unit of energy being replaced or saved. For the average price paid, the following charges must be excluded: fixed meter charge, demand charges, subsidy charges, and sales tax. (ii) The EEI projects Simple Payback calculation does not allow Applicants to monetize EEI benefits other than the dollar amount of the energy savings the Agricultural Producer or Rural Small Business realizes as a result of the improvement. Small business Solar electric Solar thermal State Used Equipment Useful life Wind energy § 4280.105 [Reserved] § 4280.106 Conflict of interest. No conflict of interest will be allowed. (a) Description. (b) Recipient conflicts of interest. (c) Assistance to employees, relatives, and associates. (d) Member/delegate clause. § 4280.107 [Reserved] § 4280.108 Compliance with other laws and regulations. Applicants and Recipients must comply with all applicable laws and regulations. §§ 4280.109-4280.119 [Reserved] § 4280.120 Applicant eligibility. Applicants must meet the following requirements to be eligible for financial assistance through this program. (a) Eligible entities. (1) System for Award Management (SAM) registration and Unique Entity Identifier (UEI). SAM.gov SAM.gov (2) Small Business Administration (SBA) profile. SAM.gov (3) Legal authority. (4) Entity type. (5) Existing Business. (6) Ownership and control. (7) Financial capability. (i) Current ratio. (ii) Cash flow. (iii) Revenue. (8) Number of awards. (b) Ineligible entities. (1) Outstanding judgment. (2) Federal income tax delinquency. (3) Federal debt delinquency. (4) Debarment or suspension. (5) Felony criminal violation. (6) Unpaid Federal tax liability. (7) Individual. (8) Active Federal Award. (9) Foreign ownership. (10) Business operations. (i) Gambling activity. et seq., (ii) Sexual activities. (iii) Racing activities. (iv) Illegal activities. § 4280.121 [Reserved] § 4280.122 Project eligibility. Projects must meet the following requirements to be eligible for financial assistance through this subpart. (a) Eligible Projects. (1) Project purpose. (i) RES Projects. (A) The purchase of a new RES; (B) The purchase of a Refurbished RES; or (C) The Retrofitting of an existing RES. (ii) EEI Projects. (A) Energy Efficiency Improvements. (B) Efficiency improvements. (C) Replacement of previously funded Project. (2) Amount requested. (i) Minimum request. (ii) Maximum request. (3) Cost Sharing. (4) Rural area. (5) Allowable use of funds. (6) Project Period. (7) Commercially Available technology. (8) Technical sustainability. (i) Resource Assessment. (A) Source of energy. (B) Type of technology. (C) Energy output. (D) Byproducts. (E) Storage system. e.g., e.g., (F) Use of energy. ( 1 Interconnection. ( 2 End User. (3) Metering Agreement. e.g. (G) Sale of energy. ( 1 Percentage. ( 2 Quantity. ( 3 Price. ( 4 Buyer. ( 5 Type of agreement. e.g. ( i Purchasing energy output. i.e. ( ii Byproducts. i.e. (H) Additional information. ( 1 Wind. ( i Source. ( ii Conditions and assumptions. ( 2 Solar. ( i Source. ( ii Type of system. ( iii Assumptions. ( 3 Bioenergy/Biomass Project. ( i Renewable Biomass resource. ( ii Shipping and receiving. ( iii Process method. ( iv Woody biomass. ( v Feedstock. ( 4 Geothermal Electric Generation. ( i Ground-source. ( ii Quality of the resource. ( iii Special handling. ( iv Resource determination. ( 5 Geothermal Direct Generation. ( i Quality of resource. ( ii Special handling. ( iii Resource determination. ( 6 Biogas. ( i Capture and treatment. ( ii Feedstock information. ( 7 Anaerobic Digester. ( i Type of system. ( ii Feedstock information. ( iii Gas production estimates. ( iv Type of operation. e.g., ( v Waste collection. ( vi System developer. ( vii Digester design assumptions. ( viii Treatment of digester effluent. e.g., ( 8 Hydrogen Project. ( i Resource information. ( ii Renewable resource. ( 9 Hydroelectric/Ocean Energy Projects. ( i Quality of the resource. ( ii Resource evaluation. ( iii Measurement setup. ( iv Proximity. ( 10 Storage components. 1 9 ( i Storage system specifications. ( ii Integration of the system. ( iii Distribution of the stored resource(s). (ii) Feasibility Study. (A) Economic analysis. ( 1 e.g. ( 2 ( 3 (4 ) ( 5 (B) Market analysis. ( 1 ( 2 ( 3 ( 4 ( 5 ( 6 (C) Technical analysis. ( 1 ( 2 ( 3 ( 4 ( 5 ( 6 ( 7 ( 8 ( 9 (D) Financial analysis. ( 1 ( 2 ( 3 ( 4 ( 5 ( 6 ( 7 ( 8 ( 9 ( 10 ( 11 ( 12 (E) Management analysis. ( 1 ( 2 ( 3 ( 4 ( 5 (F) Recommendation. (G) Qualifications. (9) Qualified Key Service Providers. (10) Key Service Provider selection. (11) Completion certificate. (12) Environmental requirements. (13) Architectural barriers. et seq. et seq. et seq. (14) Seismic safety. et seq. (15) Bioenergy. (16) Dedicated metering. (17) Residential use exceptions. (i) Providing energy through a community solar subscription program where the End Users do not own the assets; (ii) Providing energy for nursing homes and assisted living facilities that provide full-time 24 hours a day, seven days a week, licensed medical care for residents; and (iii) Providing energy for for-profit hotels that provide short-term housing (30 days or less). (18) Simple Payback Period. (19) Energy Storage Systems including BESS (20) Permits and codes. (b) Ineligible projects. (1) Amount requested. (2) Research and development. (3) Technology. (4) Residential. e.g. (5) Use of energy. (i) Providing energy through a community solar subscription program where the End Users do not own the assets; (ii) Providing energy for nursing homes and assisted living facilities that provide full-time 24 hours a day, seven days a week, licensed medical care for residents; and (iii) Providing energy for for-profit hotels that provide short-term housing (30 days or less). (6) Co-firing with non-Renewable Energy sources. (7) RES Retrofitting Projects. (8) EEI replacement Projects. (9) Multiple technologies. (10) Multiple locations. (11) Cropland installation. (12) Rated System Size. (13) Historical Energy Usage Documentation. (14) Mobile system. (15) Dispensing energy at retail. (16) Labor only Projects. (17) Distribution only Projects. (18) Storage systems. (i) Retrofitting an existing RES to add an energy storage system. (ii) Stand-alone energy storage systems. (19) Foreign components. (20) REAP funding limitation. (21) Unallowable costs. (22) Conflict of interest. § 4280.123 Reserved funds eligibility. Applications requesting $20,000 or less in award funds are eligible to compete for reserved funds. § 4280.124 [Reserved] § 4280.125 Use of funds. Allowable and unallowable uses of funds are described as follows: (a) Allowable uses of funds. (1) Purchase and installation of new or Refurbished Equipment related to the installation and/or operation of the RES or EEI, provided that the Project budget includes both Equipment and installation of the system or improvements as a whole; (2) Construction related to the installation of the RES or EEI, Retrofitting, replacement, and improvements; (3) Energy Assessment or Energy Audit, unless the cost was charged in whole or in part to another Federal Award; (4) Resource Assessment, unless the cost was charged in whole or in part to another Federal Award; (5) Fees for construction permits and licenses and fees required by an Interconnection Agreement; (6) Architectural fees; (7) Engineering fees; (8) Installation of a dedicated meter for an RES Project; (9) Up to 25 percent of Project Costs for Distribution Components and Ancillary Infrastructure for RES Projects that include Distribution Components and Ancillary Infrastructure; and (10) Up to 10 percent of the award amount to construct, improve, or acquire broadband infrastructure related to the project financed, subject to the requirements of 7 CFR part 1980, subpart M; (b) Unallowable uses of funds. (1) Real Property; (2) Agricultural, lawn, and garden Equipment and power tools, including, but not limited to: tractors, bailers, lawn mowers, weed whipper/eaters, cultivators, skid steers, bulldozers, chain saws, and wood splitters; (3) Used Equipment; (4) Equipment not wholly owned by the Recipient, for example, utility-owned substation upgrades, overhead lines, and poles; (5) Vehicles, including motorized, unmotorized, and electric vehicles, and modifications that are used to improve a vehicle's ability to propel itself ( e.g., (6) Lease payments, including lease to own or capitalized leases; (7) Feasibility studies; (8) Monthly meter fees; (9) Insurance; (10) Operations and maintenance; (11) Extended warranties; (12) Perimeter fencing; (13) Costs for labor completed by any individual who owns the Applicant entity; (14) Goods or services from an individual or entity who has a conflict of interest with the Recipient (see § 4280.106); (15) Funds used for political or lobbying activities; (16) Funds used to repay any Federal direct or guaranteed loans or other Federal debt or judgment; (17) Costs for the preparation of the grant application; (18) Expenses not directly related to the funded Project, including construction or Equipment ( e.g., (19) Expenses paid for by another Federal Award; (20) Activities that are considered unallowable by the applicable cost principles, most of which are included in 2 CFR part 200, subpart E; and (21) Costs incurred outside the Project Period. §§ 4280.126-4280.130 [Reserved] § 4280.131 Application requirements. This section identifies the items required for a complete application. All applications must include the following items, with the exception of the information in paragraph (a)(14) of this section, which is optional. (a) Applicant eligibility. (1) Applicant's legal name. SAM.gov (2) Applicant's address. SAM.gov (3) Identification numbers. SAM.gov (4) Incorporation date. (5) Certificate of Good Standing. (6) Entity bylaws. (7) Principals. (8) Applicant entity type. (i) Agricultural Producer. (A) Owner names. (B) Percentage of ownership. (C) Participation in operations. (D) Agricultural Commodity. (E) Annual income. (ii) Rural Small Business. SAM.gov. (A) Owner names. (B) Percentage of ownership. (9) Financial statements. (i) All applications. (ii) Project Cost $200,000 and greater. (10) Summary of REAP awards. (11) Business operations. (12) Foreign ownership. (13) Conflict of interest. (b) Project eligibility. (1) Project description. (2) Type of Project. (3) Technical sustainability. (4) Agreements. (5) Country of origin. (6) Commercially Available technology. (i) Operating history. (ii) Performance data. (iii) Feedstock. (iv) Process to produce or save energy. (v) Design and installation procedures. (vi) Replicability. (vii) Service providers. (viii) Equipment availability. (ix) Service availability. (x) Warranty. (7) Key Service Providers. (i) Name; (ii) Type of service provided (for example, installation); (iii) License type and number for the State in which the installation occurred; (iv) Description of qualifications, including how many similar systems have been installed; (v) Description of how the Key Service Provider was selected (for example, how many bids were received and how was the decision made to select the Key Service Provider); and (vi) A certification that there is no conflict of interest between the Key Service Provider and the Applicant and between the Key Service Provider and any other Key Service Provider working on the Project. (8) Procurement contracts. (i) The name of contractor; (ii) The amount of contract; (iii) A description of work performed under the contract; and (iv) A description of how the contractor was selected. (9) Dedicated meter. (10) Completion certificate. (11) Project location. (12) Cropland usage. (13) Size of RES. (14) Project Period. i.e. (15) Budget. (16) Cost Sharing verification. (17) Simple Payback. (i) Energy amount. (ii) Energy value. (18) Ownership of the RES or EEI. (19) Ownership of the Project site. (i) Parties to the lease, where one party is the Applicant; (ii) Start and end dates of the lease term; and (iii) Legal description of the Project location that matches the site footprint of the RES or EEI. (20) Architectural barriers. et seq. et seq. et seq. (21) Seismic safety. et seq. (22) Applicable laws, regulations, agreements, permits, codes, and standards. § 4280.132 [Reserved] § 4280.133 Submission requirements. The following information identifies when applications can be submitted, where applications must be submitted, and the format of applications. (a) Submission period. (1) Applications requesting $20,000 or less. (2) All other applications. (b) Submission process. (c) Number of applications. §§ 4280.134-4280.139 [Reserved] § 4280.140 Application processing. The following information describes the way the Agency will process applications. Applications will be evaluated for completeness, eligibility, risk, and merit. (a) Completeness evaluation. (b) Eligibility evaluation. (c) Risk evaluation. (1) Financial risk evaluation. (2) Performance risk evaluation. (3) Principals. (d) Merit evaluation. (1) Impact (0-10 points). (i) Number of employees (0 or 5 points). (ii) Critical community impact (0 or 5 points). (2) Quantity of energy to be saved or produced per award dollar requested (0-25 points). (i) EEI. Equation 1 to Paragraph (d)(2)(i) BTUs of energy saved per award dollar requested ÷ 100 = points (ii) RES. Equation 2 to Paragraph (d)(2)(ii) BTUs of energy generated per award dollar requested ÷ 100 = points (3) Percentage of energy saved or replaced (0-20 points)—(i) EEI. Table 1 to Paragraph ( d i Percent of energy saved Points awarded 9.4% or less 0 9.5%-19.4% 5 19.5%-34.4% 10 34.5%-49.4% 15 49.5% and above 20 (ii) RES. Table 2 to Paragraph ( d ii Percent of energy replaced Points awarded 9.4% or less 0 9.5%-24.4% 5 24.5%-49.4% 10 49.5%-74.4% 15 74.5%-109.4% 20 109.5% and above 0 (4) Environmental benefits (0-5 points). (i) EEI. (A) Greenhouse gases (0 or 3 points). (B) Forest conservation (0 or 1 point). (C) Water conservation (0 or 1 point). (ii) RES. (A) Greenhouse gases (0 or 3 points). (B) Forest conservation (0 or 1 point). (C) Renewable fuel standard (0 or 1 point). (5) Prior awards (0-15 points). (i) Prior award within two years (0 points). (ii) No prior awards within two years (5 points). (iii) No prior awards (15 points). (6) Simple payback (0-15 points). (i) EEI. Equation 3 to Paragraph (d)(6)(i) Simple Payback = (Project Cost) ÷ (dollar value of energy saved). Table 3 to Paragraph ( d i Simple payback Points awarded More than 12 0 At least 8 and up to 12 5 At least 4 and up to 7 10 Less than 4 15 (ii) RES. Equation 4 to Paragraph (d)(6)(ii) Simple Payback = (Project Cost) ÷ (dollar value of energy units replaced, credited, sold, or used and fair market value of Byproducts as applicable in a typical year). Table 4 to Paragraph ( d ii Simple payback Points awarded More than 25 years 0 At least 15 and up to 25 5 At least 10 and up to 14 10 Less than 10 15 (e) Priority points (0-10 points). § 4280.141 Application withdrawal. During the period between the submission of an application and award approval, the Applicant must notify the Agency in writing if the Project is no longer viable or the Applicant no longer is requesting financial assistance for the Project. When the Applicant notifies the Agency, the selection will be withdrawn from consideration for funding. §§ 4280.142-4280.149 [Reserved] § 4280.150 Award selection. Applications that have been fully processed and are determined to be complete, eligible for funding, and are not removed from consideration due to high risk will be evaluated based on the merit evaluation criteria and priority criteria (see § 4280.140). A grant award is not automatically guaranteed, and an applicant may not receive any funding. The points awarded for merit evaluation and priority criteria will be added for each application. Applications will then be ranked solely based on the points awarded. The Agency will select applications for funding based on the following procedures. (a) Applications requesting $20,000 or less. (b) All other applications. § 4280.151 Notification of successful applicants. The following process will be used to notify Applicants whose applications are selected for funding. (a) Notification. (b) Meeting the conditions of the Federal Award. (c) Standard award terms and conditions. § 4280.152 Notification of unsuccessful Applicants. Applicants whose applications are not eligible for financial assistance through this program, who are removed from funding consideration due to a high level of risk, or whose applications did not score high enough to be funded will be notified as soon as practicable. No further processing of the application will occur. § 4280.153 Award approval. This section applies to all awards made before or after October 1, 2026. Once the Applicant has met all the conditions specified in the LOC, the Agency will review the Federal Award for approval. The approval will be conveyed through the execution of Form RD 4280-2, which is the FAA, and provides all the terms of the Federal Award. Costs must be allowable and be incurred during the approved Project Period. Applications with a Form 1940-1 “Request for Obligation of Funds” signed by the Applicant and the Agency prior to the effective date of this regulation will continue to be processed, provided that their project remains in line with applicable terms and conditions. Each person or entity is subject to maximum amount of grant assistance per Federal fiscal year. Entities that share common management or ownership, regardless of percent owned, either directly or indirectly through another entity or person, are considered one entity for which aggregate funding cannot exceed the applicable dollar limit. §§ 4280.154-4280.159 [Reserved] § 4280.160 Reporting requirements. Recipients are required to submit reports on financial status, performance, and Equipment, as described below. (a) Financial report. (b) Performance report. (c) Equipment report. § 4280.161 Monitoring awards. Awards will be monitored by the Agency in accordance with applicable laws, regulations, and policies. The Agency may terminate or suspend the award for lack of adequate or timely progress, reporting, documentation, or for failure to comply with Agency or award requirements. § 4280.162 Transfer of obligations. The Agency will not approve any transfer of obligations for this program. §§ 4280.163-4280.198 [Reserved] § 4280.199 OMB control number. The reporting and recordkeeping requirements contained in this subpart have been approved by OMB and have been assigned OMB control number 0570-0067 in accordance with the Paperwork Reduction Act of 1995. Subpart C—Rural Energy for America Program: Grants for Energy Audits and Renewable Energy Development Assistance Source: 91 FR 62627, Oct. 1, 2026, unless otherwise noted. § 4280.201 Purpose. This subpart contains the procedures and requirements for providing financial assistance under the Rural Energy for America Program (REAP) through grants to eligible entities to assist Agricultural Producers and Rural Small Businesses to become more energy efficient and to use Renewable Energy technologies and resources. § 4280.202 Organization of subpart. The information in this subpart is organized into six main topics. (a) General information. (b) Eligibility information. (c) Application requirements information. (d) Application processing information. (e) Award information. (f) Post-award information. (g) Other. (2) Section 4280.299 includes the Office of Management and Budget (OMB) control number for reporting and recordkeeping requirements under this subpart. § 4280.203 Acronyms. (a) BESS—Battery Energy Storage System. (b) CFR—Code of Federal Regulations. (c) COI—Conflict of Interest. (d) EA—Energy Audit. (e) EEI—Energy Efficiency Improvement. (f) FAA—Financial Assistance Agreement. (g) LOC—Letter of Conditions. (h) REDA—Renewable Energy Development Assistance. (i) RES—Renewable Energy System. (j) SAM—System for Award Management. (k) UEI—Unique Entity Identifier. (l) U.S.C.—United States Code. (m) USDA—United States Department of Agriculture. § 4280.204 Definitions. These are the definitions for terms used in this subpart. See also the defined terms located at 7 CFR 4280.104. All defined terms used in this subpart are capitalized. Council Institution of Higher Education (IHE) Instrumentality Key personnel Nonprofit organization Period of performance Public power entity Renewable Energy site assessment Renewable energy development assistance (REDA) Ultimate beneficiary § 4280.205 [Reserved] § 4280.206 Conflict of interest. No conflict of interest will be allowed. (a) Description. (b) Recipient conflicts of interest. (c) Assistance to employees, relatives, and associates. (d) Member/delegate clause. § 4280.207 [Reserved] § 4280.208 Compliance with other laws and regulations. Applicants and Recipients must comply with all applicable laws and regulations. §§ 4280.209-4280.219 [Reserved] § 4280.220 Applicant eligibility. Applicants must meet the following requirements to be eligible for financial assistance through this program. (a) Eligible entities. (1) System for Award Management (SAM) registration and Unique Entity Identifier (UEI). SAM.gov. (2) Legal authority. (3) Entity type. (i) A unit of State government, Indian Tribal government, or Local Government; (ii) An Institution of Higher Education; including land grant colleges and universities; (iii) A Rural electric cooperative; (iv) A Public Power Entity; (v) An Instrumentality; or (vi) A Council. (4) Number of Awards. (b) Ineligible entities. (1) Outstanding judgment. (2) Federal income tax delinquency. (3) Federal debt delinquency. (4) Debarment or suspension. (5) Felony criminal violation. (6) Unpaid Federal tax liability. (7) Active REAP EA/REDA or REAP TAG Award. (8) Nonprofit Organization. (9) Individual. (10) Foreign ownership. § 4280.221 Ultimate Beneficiary eligibility. Ultimate Beneficiaries must meet all of the following requirements to receive assistance through Recipients of this program. (a) Type of entity. (b) Location. (c) Cost Sharing. § 4280.222 Project eligibility. Projects must meet the following requirements to be considered for financial assistance through this program. (a) Eligible Projects. (1) Project purpose. (2) Project location. (3) Amount requested. (4) Cost Sharing. (5) Allowable use of funds. (6) Period of Performance. (b) Ineligible Projects. (1) Amount requested. (2) Research and development. (3) Feasibility Studies. (4) Ineligible Entities. (5) Computer software. (6) Residential. (7) Unallowable costs. (8) Conflict of interest. §§ 4280.223-4280.224 [Reserved] § 4280.225 Use of funds. See the Cost Principles located at 2 CFR part 200, subpart E. Additional information about allowable and unallowable uses of funds are described as follows. (a) Allowable uses of funds. (1) Salaries; (2) Fringe benefits; (3) Travel expenses; (4) Office supplies; (5) Contractual expenses for qualified contractors to perform EA and REDA; and (6) Indirect costs up to five percent of the Federal Award made under this subpart. Note that this limitation is statutory and is in effect regardless of whether the Applicant has a Negotiated Indirect Cost Rate Agreement with the Federal government. (b) Unallowable uses of funds. (1) Real Property purchase or improvements; (2) Building or facility planning, developing, repair, rehabilitation, or acquisition; (3) Equipment purchase, lease, or installation, that is not part of the RES or EEI; (4) Vehicle purchase or repair; (5) Construction and construction-related activities; (6) Cost of preparing the application for financial assistance under this subpart; (7) Any expenses not directly related to the funded Project; (8) Payment or waiver of student tuition, including for graduate students; (9) Costs associated with training individuals to become qualified to conduct EA or REDA; (10) Promotional items including, but not limited to, pens, cups, apparel, magnets, and decorations. (11) Raffles; (12) More than 10 percent of Project Costs for outreach and marketing of the Recipient's available services under the proposed work plan; (13) More than 5 percent of the Federal Award amount requested for indirect costs; (14) Goods and services provided by an individual or entity that has a conflict of interest, as described in § 4280.206; (15) Payment of any judgment or debt owed to the United States; (16) Political or lobbying activities, consistent with 31 U.S.C. 1352 (g)(1); and (17) Activities considered unallowable by the applicable cost principles, mostly of which are included in 2 CFR part 200, subpart E. §§ 4280.226-4280.230 [Reserved] § 4280.231 Application requirements. This section identifies the items required for a complete application. Each Applicant can only submit one application for EA or for REDA. (a) Applicant Eligibility. (1) Form SF-424. (2) Entity Type. (i) A unit of State government, Indian Tribal government, or Local Government; (ii) An Institution of Higher Education; including land grant colleges and universities; (iii) A Rural electric cooperative; (iv) A Public Power Entity; (v) An Instrumentality; or (vi) A Council. (3) Conflict of interest. (4) Summary of REAP awards. (b) Project Eligibility. (1) Work plan. (i) Project title. (ii) Project description. (iii) Goals. (iv) Service area. (A) Description of the service area, including the State(s) served, the total number of counties in the State(s), as well as the number of counties served in each State; (B) The reason(s) the service area was selected; and (C) The needs of the service area. (v) Ultimate Beneficiaries. (A) If selected at the time of application, a list of Agricultural Producers and Rural Small Businesses to be served, including which type of Ultimate Beneficiary they are and the names and locations (city, state) of the Ultimate Beneficiaries; (B) The methodology used or that will be used to select the Ultimate Beneficiaries; and (C) Written commitments from Ultimate Beneficiaries, if selected at the time of application. (vi) Services. (A) A description of the service; (B) The time period during which the service is expected to be accomplished; (C) The Key Personnel who will be responsible for completing the service; and (D) The potential environmental benefits from the proposed services. (vii) Outreach plan. (viii) Applicant experience. (A) Past services. ( 1 ( 2 ( 3 (B) Example of past service. (ix) Budget. (A) The names of Key Personnel and each individual's salaries and fringe benefits, including hourly rate/annual salary and what is included in fringe benefits; (B) Descriptions of trips to be taken, including who is traveling, the purpose of the travel, and the cost of each trip; (C) An itemized list of office supplies to be purchased and their purpose; and (D) An itemized list of contracts, including vendor, purpose, and amount. (2) Cost Sharing. (3) Financial statements. § 4280.232 [Reserved] § 4280.233 Submission requirements. The following information identifies when applications can be submitted, where applications must be submitted, and the format of the applications. (a) Submission period. (b) Submission address. Grants.gov (c) Submission format. (d) Number of applications. §§ 4280.234-4280.239 [Reserved] § 4280.240 Application processing. The following information describes the way the Agency will process applications. Applications will be evaluated for completeness, eligibility, risk, and merit. (a) Completeness evaluation. (b) Eligibility evaluation. (c) Risk evaluation. (1) Financial risk. (2) Performance risk evaluation. (i) Performance deficiencies. (ii) Mitigation of risk. (3) Principals. (d) Merit evaluation. (1) Applicant experience (0-15 points). (i) One quality work product (0 points). (ii) Two quality work products (5 points). (iii) Three quality work products (10 points). (iv) Four quality work products (15 points). (2) Service area (0-25 points). (i) Identified need (0-5 points). (ii) Fewer than 10 percent of counties (0 points). (iii) 10-24 percent of counties (5 points). (iv) 25-49 percent of counties (10 points). (v) 50-74 percent of counties (15 points). (vi) 75-100 percent of counties or multi-state (20 points). (3) Number of Ultimate Beneficiaries to be served (0-10 points). (i) Less than 5 Ultimate Beneficiaries (0 points). (ii) 5-9 Ultimate Beneficiaries (2 points). (iii) 10-25 Ultimate Beneficiaries (5 points). (iv) More than 25 Ultimate Beneficiaries (10 points). (4) Commitment of Ultimate Beneficiaries (0-10 points). (i) Less than 5 commitments (0 points). (ii) 5-10 commitments (2 points). (iii) 11-15 commitments (5 points). (iv) 16-20 commitments (8 points). (v) 21 or more commitments (10 points). (5) Potential of project to produce energy savings or generation and environmental benefits (0-10 points). (i) Energy savings or energy generation (0-5 points). (A) EA. ( 1 2 ( 2 (B) REDA. ( 1 2 ( 2 (ii) Environmental benefits (0-5 points). (6) Outreach and information (0-10 points). (i) Strategies (0-5 points). (ii) Goals (0-5 points). (7) Cost sharing (0-20 points). Table 1 to Paragraph (d)(7) Cost share amount Points 5.4% or less 0 5.5-10.4% 5 10.5-25.4% 10 25.5%-50.4% 15 50.5% or more 20 § 4280.241 Application withdrawal. During the period between the submission of an application and award approval, the Applicant must notify the Agency in writing if the Project is no longer viable or the Applicant no longer is requesting financial assistance for the Project. When the Applicant notifies the Agency, the application will be withdrawn from consideration for funding. §§ 4280.242-4280.249 [Reserved] § 4280.250 Award selection. Applications that have been fully processed and are determined to be complete, eligible for funding, and are not removed from consideration due to high risk will be evaluated based on the merit evaluation criteria and priority criteria (see § 4280.240). The points awarded for merit evaluation and priority criteria will be added for each application. Applications will then be ranked solely based on the points awarded. The Agency will first select the top two highest-scoring applications from each State (where Puerto Rico, the Virgin Islands, and the Western Pacific are each considered a State), as long as the top two highest-scoring applications score at least 40 points. Applications that score below 40 points will not be selected for funding, regardless of their ranking. Then the Agency will select applications for funding based on rank order until available funds have been expended or a minimum score of 40 points is reached. If funding still remains the Agency may select the next highest scoring applications from the field. § 4280.251 Notification of successful Applicants. The following process will be used to notify Applicants whose applications are selected for funding. (a) Notification. (b) Meeting the conditions of the Federal Award. (c) Standard award terms and conditions. § 4280.252 Notification of unsuccessful Applicants. Applicants whose applications are not eligible for financial assistance through this program, who are removed from funding consideration due to a high level of risk, or whose applications did not score high enough to be funded will be notified as soon as it is practicable. No further processing of the application will occur. § 4280.253 Award approval. The Agency will approve a Federal Award once the Applicant has met all the conditions specified in the LOC. The approval will be conveyed through the execution of a Form RD 4280-2, which is the FAA, and provides all the terms of the Federal Award. Once the Federal Award has been approved, the Recipient must begin work on the Project and incur costs as described in the approved work plan and budget, which are attached to Form RD 4280-2. Costs must be allowable and be incurred during the approved Period of Performance. §§ 4280.254-4280.259 [Reserved] § 4280.260 Reporting requirements. Recipients are required to submit reports on financial status and performance, as described below. (a) Financial reports. (1) Semi-annual. (2) Final. (b) Performance report. (1) Semi-annual. (2) Final. § 4280.261 Monitoring awards. Awards will be monitored by Agency personnel in accordance with applicable laws, regulations, and policies. The Agency may terminate or suspend the award for lack of adequate or timely progress, reporting, documentation, or for failure to comply with Agency or award requirements. §§ 4280.262-4284.298 [Reserved] § 4280.299 OMB control number. The reporting and recordkeeping requirements contained in this subpart have been approved by OMB and have been assigned OMB control number 0570-0067 in accordance with the Paperwork Reduction Act of 1995. Subpart D—Rural Microentrepreneur Assistance Program Source: 86 FR 26353, May 14, 2021, unless otherwise noted. § 4280.301 Purpose and scope. (a) This subpart contains the policies and procedures by which the Agency will administer the Rural Microentrepreneur Assistance Program (RMAP). The purpose of the Program is to support the development and ongoing success of rural microentrepreneurs and microenterprises. To accomplish this purpose, the Program will make direct loans and provide grants to selected Microenterprise Development Organizations. Selected Microenterprise Development Organization will use the funds to: (1) Provide microloans to rural microentrepreneurs and microenterprises; (2) Provide business-based training and technical assistance to rural microborrowers and potential microborrowers as an essential part of the microlending process; (3) Perform other such activities as deemed appropriate by the Secretary to ensure the development and ongoing success of rural microenterprises. (b) The Agency will make direct loans to microlenders for the purpose of providing fixed interest rate microloans to rural microentrepreneurs for business startup and for growing microenterprises in compliance with §§ 4280.311 and 4280.312. Eligible microlenders will also be eligible to receive microlender technical assistance grants to provide technical assistance and training to microenterprises that have received or are seeking a microloan under this program in compliance with § 4280.313. (c) To allow for extended opportunities for technical assistance and training, the Agency will make technical assistance-only grants to Microenterprise Development Organizations that have sources of funding other than program funds for making or facilitating microloans. § 4280.302 Definitions and abbreviations. (a) General definitions. Administrative expenses. Agency. Agricultural production. Applicant. Application. Award. Business incubator. Close relative. Default. Delinquency. Eligible project cost. Facilitation of access to capital. Federal fiscal year (FY Full-time equivalent employee (FTE). Indian tribe. Loan loss reserve fund (LLRF). Microborrower. Microenterprise. (i) A sole proprietorship located in a rural area, as defined; or (ii) A business entity located in a rural area, as defined, with not more than 10 full-time-equivalent employees. Such businesses may include any type of legal business that meets local standards of decency, though certain business types may be ineligible as defined in § 4280.323 Business types may also include agricultural producers provided they meet the stipulations in this definition. Microenterprise development organization (MDO). (i) Provide training and technical assistance; (ii) Make microloans or facilitate access to capital or other related services; and (iii) Have a demonstrated record of delivering services to rural microentrepreneurs, or an effective plan to develop a program to deliver services to rural microentrepreneurs. Microentrepreneur. Microlender. Microloan. Military personnel. Nonprofit entity. Program. Rural Microloan Revolving Fund (RMRF). Rural or rural area. (i) Any area in the urbanized area contiguous and adjacent to a city or town that has a population of more than 50,000 inhabitants that is attached to the urbanized area of a city or town with more than 50,000 inhabitants by a contiguous area of urbanized census blocks that is not more than two census blocks wide. Applicants from such an area should work with their Rural Development State Office to request a determination of whether their project is located in a rural area under this provision. (ii) For the Commonwealth of Puerto Rico, the island is considered Rural and eligible except for the San Juan Census Designated Place (CDP) and any other CDP with greater than 50,000 inhabitants. Areas within CDPs with greater than 50,000 inhabitants, other than the San Juan CDP, may be determined to be rural if they are “not urban in character.” (iii) For the State of Hawaii, all areas within the State are considered rural and eligible except for the Honolulu CDP within the County of Honolulu and any other CDP with greater than 50,000 inhabitants. Areas within CDPs with greater than 50,000 inhabitants, other than the Honolulu CDP, may be determined to be rural if they are “not urban in character.” (iv) For the purpose of defining a rural area in the Republic of Palau, the Federated States of Micronesia, and the Republic of the Marshall Islands, the Agency shall determine what constitutes rural and rural area based on available population data. State. Technical assistance (TA) and training. Technical assistance grant. (b) Abbreviations. FTE FY LLRF MDO RMAP RMRF TA [86 FR 26353, May 14, 2021, as amended at 87 FR 38644, June 29, 2022] § 4280.303 Exception authority. The Administrator may make limited exceptions to the requirements or provisions of this subpart. Such exceptions must be in the best financial interest of the Federal government and may not conflict with applicable law. No exceptions may be made regarding applicant eligibility, project eligibility, or the rural area definition. In addition, exceptions may not be made: (a) To accept an applicant into the program that would not normally be accepted under the eligibility criteria; or (b) To fund an interested party or applicant that has not successfully competed for funding in accordance with this subpart. § 4280.304 Review or appeal rights and administrative concerns. (a) Review or appeal rights. (b) Administrative concerns. § 4280.305 Nondiscrimination and compliance with other Federal laws. (a) Any entity receiving funds under this subpart must comply with other applicable Federal laws, including the Equal Employment Opportunities Act of 1972, the Americans with Disabilities Act, the Equal Credit Opportunity Act, the Civil Rights Act of 1964, Section 504 of the Rehabilitation Act of 1973, the Age Discrimination Act of 1975, and 7 CFR part 1901, subpart E. (b) The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national origin, age, disability, and where applicable, sex, marital status, familial status, parental status, religion, sexual orientation, genetic information, political beliefs, reprisal, or because all or part of an individual's income is derived from any public assistance program. (Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact USDA's TARGET Center at (202) 720-2600 (voice and TDD). Any applicant that believes it has been discriminated against as a result of applying for funds under this program should contact: USDA, Director, Office of Adjudication, 1400 Independence Avenue SW, Washington, DC 20250-9410, or call (866) 632-9992 (toll free) or (202) 401-0216 (TDD) for information and instructions regarding the filing of a Civil Rights complaint. USDA is an equal opportunity provider, employer, and lender. (c) A pre-award compliance review will take place at the time of application when the applicant completes or provides the Agency with sufficient demographic information to complete Form RD 400-8, “Compliance Review”. Post-award compliance reviews will take place once every three years after the beginning of participation in the program and until such time as a microlender leaves the program. § 4280.306 Forms, regulations, and instructions. Copies of all forms, regulations, and instructions referenced in this subpart are available in any Agency office, the Agency's website at: https://www.rd.usda.gov/page/regulations-and-guidance/ www.grants.gov §§ 4280.307-4280.309 [Reserved] § 4280.310 Program requirements for MDOs. (a) Eligibility requirements for applicant MDOs. (1) Type of applicant. (2 ) Citizenship. (i) Citizens of the United States, the Republic of Palau, the Federated States of Micronesia, the Republic of the Marshall Islands, American Samoa, or the Commonwealth of Puerto Rico; or (ii) Legally admitted permanent residents residing in the United States. (3) Legal authority and responsibility. (4) Other eligibility requirements. (i) Has demonstrated experience in the management of a revolving loan fund; or (ii) Certifies that it, or its employees, have received education and training from a qualified microenterprise development training entity so that the applicant has the capacity to manage such a revolving loan fund; (iii) Is actively and successfully participating as an intermediary lender in good standing under similar loan programs; and (iv) Provides an attorney's opinion regarding the potential microlender's legal status and its ability to enter into program transactions at the time of initial entry into the program. Subsequent to acceptance into the program, an attorney's opinion will not be required unless the Agency determines significant changes to the microlender have occurred. (b) System for Awards Management. (c) Minimum score. (d) Ineligible applicants. (1) Does not meet the definition of an MDO as provided in § 4280.302; (2) Is debarred, suspended or otherwise excluded from, or ineligible for, participation in Federal assistance programs; or (3) Has an outstanding judgment against it, obtained by the United States in a Federal Court (other than U.S. Tax Court). (e) Delinquencies. (f) Application eligibility and qualification. (1) Establish an RMRF, or add capital to an RMRF originally capitalized under this program, and establish or continue a training and TA program for its microborrowers and prospective microborrowers; or (2) Fund a TA-only grant program to provide services to rural microentrepreneurs and microenterprises. (g) Business incubators. § 4280.311 Loan provisions for Agency loans to microlenders. (a) Purpose of the loan. (b) Eligible activities. (c) Ineligible activities. (d) Cost share. (1) Microborrower project level option. (2) RMRF level option. (e) Loan terms and conditions for microlenders. (1) Funds received from the Agency and any non-Federal share will be deposited into an account that will be the RMRF account and shall not be mingled with other MDO funds. The Agency will hold first lien position on the RMRF account, the LLRF account, and all notes receivable from microloans using Agency funds. (2) The RMRF account will be used to make fixed-rate microloans, accept repayments from microborrowers and reimbursements from the LLRF, to repay the Agency loan and, with the advance written approval of the Agency, to supplement the LLRF with interest or fee earnings from the RMRF. (3) The term of an Agency loan made to a microlender will be 20 years. If requested by the applicant MDO, a shorter term may be agreed upon by the microlender and the Agency. If a repayment workout is required after loan closing, the term of the loan may not exceed a 20-year period from the loan origination date. (4) Each RMAP loan made to a microlender during its first five years of participation in the program will bear an interest rate of 2 percent for the life of the loan. After the fifth year of an MDO's continuous and satisfactory participation in the program, each new loan made to the microlender will bear interest at a rate of 1 percent. The interest rate on previous loans will remain unchanged. Satisfactory participation requires a loan default rate of 5 percent or less, a pattern of delinquencies of 10 percent or less in the MDO's RMRF account(s), and timely submission of reports to the Agency as required by § 4280.311(h). (5) Each loan made to a microlender will automatically receive a 2-year deferral during which time no repayment to the Agency will be required. The deferral period will begin on the day the Agency's loan to the microlender is closed. During the initial 2-year deferral period, each loan to a microlender will accrue interest only on funds disbursed by the Agency. Interest accrued during the 2-year deferral period will be capitalized to the loan's principal balance during the 24th month of the loan unless the microlender chooses to make a voluntary payment of the accrued interest. The required monthly payments to amortize the loan after the 2-year deferral period will be based on the full loan amount plus capitalized interest, not just the amount disbursed to the microlender, even in cases where the Agency's loan has not been fully advanced to the microlender. (6) Except in the case of liquidation or early repayment, loans to microlenders must fully amortize over the life of the loan. The first payment will be due to the Agency on the last day of the 24th month of the life of the loan. (7) The microlender is responsible for full repayment of its loan to the Agency regardless of the performance of its microloan portfolio. Partial or full repayment of debt to the Agency under the program may be made at any time, including during the deferral period, without any pre-payment penalties being assessed. (8) The Agency may call the entire loan due and payable prior to the end of the full term due to any non-performance, delinquency, or default on the loan. (9) The loan closing between the microlender and the Agency should take place within 90 days from the execution of Form RD 1940-1, “Request for Obligation of Funds.” Microlenders that are unable to close the loan within 90 days of obligation must provide justification for the delay or loan funds will be forfeited through a de-obligation of funds. (10) Microlenders will be eligible to receive a disbursement of up to 25 percent of the total loan amount at the time of loan closing. Funds disbursed at loan closing exceeding 25 percent of the loan amount will only be made if and to the extent that the MDO has made a funding commitment to an eligible microborrower that will be closed within 60 days from the Agency loan date. Interest will accrue on all funds disbursed to the microlender beginning on the date of disbursement. (11) Microlenders may request in writing and receive additional loan disbursements until the full amount of the loan to the microlender is disbursed, or until the end of the 36th month of the loan, whichever occurs first. Letters of request for disbursement should be made not more often than quarterly and must be accompanied by a description of the microlender's anticipated need. Such description will indicate the amount and number of microloans anticipated to be made with the loan disbursement. (12) Funds not disbursed to the microlender by the end of the 36th month of the loan from the Agency will be de-obligated and no longer available for disbursement to the MDO. In such cases where loan funds are deobligated, the Agency will establish a revised payment schedule to fully amortize the loan balance by its maturity date. (13) In the event a microlender fails to meet its payment or reporting obligations to the Agency, the Agency may pursue any combination of the following: (i) Take possession of the RMRF and/or any microloans outstanding, and/or the LLRF; (ii) Call the loan due and payable in full; and/or (iii) Enter into a workout agreement acceptable to the Agency, which may or may not include transfer or sale of the portfolio to another microlender (whether or not funded under the program) deemed acceptable to the Agency. (14) If a microlender makes a withdrawal from the RMRF for any purpose other than to make a microloan, repay the Agency, or, with advance written approval, transfer an appropriate amount of non-Federal funds to the LLRF, the Agency may take actions including the restriction of further access to withdrawals from the account by the microlender or declaring the loan in default due to improper use of loan funds. (f) Loan funding limitations Minimum and maximum loan amounts. (2) Use of funds. (g) Loan loss reserve fund (LLRF). (1) Purpose. (2) Capitalization and maintenance. (i) The microlender must maintain the LLRF at a minimum of 5 percent of the total amount owed by the microlender under the program to the Agency. If the LLRF falls below the required amount, the microlender will have 30 days to replenish the LLRF. The Agency will hold a security interest in the account and all funds therein until the MDO has repaid its debt to the Agency under this program. (ii) No Agency loan funds may be used to capitalize the LLRF. (iii) The LLRF must be held in a Federally insured deposit account separate and distinct from any other fund owned by the microlender. (iv) The LLRF must remain open, appropriately capitalized, and active until such time as any loans owed to the Agency by the microlender under the program related to such LLRF are paid in full. (3) Use of LLRF. (i) Recapitalize the RMRF in the event of the loss and write-off of a microloan ; (ii) Accept Non-Federal deposits as required for maintenance of the fund at a level equal to 5 percent or more of the amount owed to the Agency by the microlender under the program; and (iii) Prepay or repay the Agency program loan. (4) LLRF funded at time of closing. (5) Additional LLRF funding. (h) Recordkeeping, reporting, and oversight. (1) Periodic reports. (i) An Agency-approved form containing such information as the Agency may require, and in accordance with OMB circulars and guidance, to ensure that funds provided are being used for the purposes for which the loan to the microlender was made; (ii) Listing of each microborrower under this program, their loan balance and payment status; and (iii) A discussion reconciling the microlender's actual results for the period against its goals, milestones, and objectives as provided in the application package. (2) Minimum retention. (3) Combining accounts and reports. (i) The underlying loans have the same rates, terms and conditions, including the method of determining matching funds for a microborrower's project; and (ii) The combined report allows the Agency to effectively administer the program, including providing the same level of transparency and information for each loan as if separate RMRF and LLRF reports had been prepared. (4) Delinquency. (5) Other reports. (6) Access to microlender's records. (7) Changes in key personnel. § 4280.312 Loan approval and closing. (a) Loan approval and obligating funds. (b) Letter of conditions. (c) Loan closing. (i) A pre-authorized debit form allowing the Agency to withdraw payments from the RMRF account, and in the event of a repayment workout, from the LLRF account; (ii) An Agency-approved automatic deposit authorization form, from the depository institution providing the Agency with the RMRF account number, into which funds may be deposited at time of disbursement to the microlender; (iii) A statement from the depository institution as to the amount of cash in the LLRF account; (iv) An Agency-approved promissory note and a loan agreement for each loan to the MDO must be executed at loan closing. The loan agreement will be prepared by the Agency using Form RD 4274-4, “Intermediary Relending Program/Rural Microentrepreneur Assistance Program Loan Agreement,” and reviewed by the MDO prior to loan closing; and (v) An appropriate security agreement on the LLRF and RMRF accounts must be executed at loan closing. (2) At loan closing, the microlender must certify that: (i) All requirements of the letter of conditions have been met; and (ii) There has been no material adverse change in the microlender, its key personnel, or its financial condition since the issuance of the letter of conditions. If one or more adverse changes have occurred, the microlender must explain the changes and the Agency must determine that the microlender remains eligible and qualified to participate as an MDO. (3) The microlender will provide sufficient evidence that no lawsuits or other legal issues are pending or threatened that would adversely affect the security of the microlender when Agency security instruments are filed. § 4280.313 Grant provisions. Grants offered under this program will be made to eligible MDOs in such amounts and requirements for microlenders with a loan(s) from the Agency, and for MDOs that seek only a TA grant from the Agency. Competition for these funds will occur as a part of the application and qualification process of becoming a microlender or grant recipient. No entity will receive grant funding as both a microlender and a TA-only provider. RMAP microlenders are not eligible for TA-only grant funding and an MDO receiving TA-only grant funding is not eligible for microlender grant funding. Failure to meet scoring benchmarks will preclude an applicant from receiving loan and/or grant dollars. Once an MDO is participating as a microlender, TA grant funds will be made available annually based on the MDO's lending balances and the availability of funds. (a) Microlender grants. (1) Technical assistance grants to microlenders will be awarded annually on a non-competitive basis in an amount based on the MDO's outstanding loan balance as of June 30, subject to satisfactory program performance of the microlender and the availability of funds. Satisfactory performance includes the timely payment of program loan(s) and the submission of periodic reports to the Agency. Annual TA grants to a microlender, subject to the availability of funds, will be made in an amount to replenish the microlender's TA fund to an amount equal to 20 percent of the outstanding principal balance of loans made by the microlender to ultimate recipients unless otherwise published in an annual program funding notice. If available grant funds are not sufficient to fully replenish each microlender's TA funds to 20 percent of their outstanding loan balance, the available funds will be distributed proportionately based on the percentage of available funds to the total amount of annual TA grant funds requested. (2) Any grant dollars obligated but not spent by the microlender from their initial or subsequent grants will be subtracted from the subsequent year's grant eligibility calculation to ensure that obligations cover only microloans made and active and that the MDO's total grant funds available for TA do not exceed the established 20 percent threshold. (3) The microlender will agree to use TA grant funds exclusively for providing TA assistance and training to eligible microentrepreneurs and microenterprises, with the exception that up to 10 percent of the grant funds may be used to cover the microlender's administrative expenses. Grant funds may not be used to make loan payments. (b) Technical assistance only grants. (1) The amount of a TA-only grant under this program will not exceed 10 percent of the amount of authorized appropriations available in any Federal FY for TA-only grants. (2) Technical assistance only grants will have a grant term not to exceed 12 months from the date the grant agreement is signed. (3) Technical assistance only grantees will be required to: (i) Refer clients to internal or external non-program funded lenders for loans of $50,000 or less, and (ii) Collect data regarding such clients. Technical assistance-only grantees will be considered successful if a minimum of 1-in-5 TA clients are referred for a microloan and are operating a business within 18 months of receiving TA from the MDO. (c) Matching requirement. (d) Administrative expenses. (1) Administrative expenses should be kept to a minimum. As such, the applicant MDO is required in the application materials to provide an administrative budget plan indicating the amount of funding it will need for administrative purposes. Applicants will be scored accordingly, with those using less than 10 percent of the grant funds for administrative purposes being scored higher than those using 10 percent of the grant funds for administrative purposes. (2) While operating the program, the selected grantee will be expected to adhere to the estimates it provides in its application and annual budget. If for any reason the MDO cannot meet those expectations, it must contact the Agency in writing with justification to request a budget adjustment. Budget adjustments will be considered only if the adjustment result for administrative expenses is within the 10 percent limitation. (3) Microlenders that exceed 10 percent for administrative expenses will be considered in performance default and may be subject to Agency actions including the forfeiting of funds. (e) Ineligible grant purposes. (1) Grant application preparation costs; (2) Costs incurred prior to the obligation date of the grant; (3) Capital improvements; (4) Political or lobbying activities; (5) Assistance to any ineligible entity; (6) Payment of any judgment or debt owed; or (7) Payment of any loan. (f) Facilitation of access to capital. (g) Grant agreement. § 4280.314 [Reserved] § 4280.315 MDO application and submission information. (a) Initial and subsequent applications. Federal Register (b) Content and form of submission. (c) Application information for all applicants. (1) Standard Form-424, “Application for Federal Assistance” for grants. (2) Standard Form-424A, “Budget Information—Non-Construction Programs.” (3) For entities applying for program loan funds to become an RMAP microlender only, Form RD 1910-11, “Certification of No Federal Debt.” (4) Form RD 400-8, “Compliance Review” or sufficient demographic information for Agency completion of Form RD 400-8. (5) Demonstration that the applicant is eligible to apply to participate in the program by submission of documentation as follows: (i) If a nonprofit entity, evidence that the applicant organization meets the citizenship requirements and a copy of the applicant's bylaws and articles of incorporation, which include evidence that the applicant is legally considered a non-profit organization; (ii) If an Indian tribe, evidence that the applicant is a federally recognized Indian tribe, and that the Indian tribe neither operates nor is currently served by an existing MDO; (iii) If a public institution of higher education, evidence that the applicant is a public institution of higher education; and (iv) For nonprofit applicants only, a Certificate of Good Standing, not more than six (6) months old, from the Office of the Secretary of State in the State, or tribal equivalent, in which the applicant is located. If the applicant has offices in more than one state, then the state in which the applicant is organized and licensed will be considered the home location. (6) Certification by the applicant that it cannot obtain sufficient credit elsewhere to fund the activities called for under the program with similar rates and terms. (d) Type of application specific information. (1) An applicant with more than 3 years of experience as an MDO outside of the program seeking to participate as an RMAP microlender must provide sufficient documentation to validate its years of experience. (2) An applicant with 3 years or less experience as an MDO outside of the program seeking to participate as an RMAP microlender must provide the additional information specified in § 4280.316(c). (3) An applicant seeking status as a microlender must identify in its application which cost-share option(s) the applicant will utilize, as described in § 4280.311(d), to meet the Federal cost-share requirement. If the applicant will utilize the RMRF-level option, the applicant shall identify the amount(s) and source(s) of the non-Federal share. (4) An applicant seeking TA-only grant funds must provide the additional information specified in § 4280.316(d). (e) Application limits. (f) Completed applications. § 4280.316 Application scoring. Applications will be scored based on the criteria specified in this section using only the information submitted in the application. The total available points per application are 100 as shown in paragraphs (a) through (e) of this section. Awards will be based on the points ranking, with the highest scoring applications being funded first from the available funding. (a) Application requirements for all applicants. (1) An organizational chart clearly showing the positions and naming the individuals in those positions. Of particular interest to the Agency are management positions and those positions essential to the operation of microlending and TA programming. Up to 5 points will be awarded based on the completeness of the organizational chart and management experience. (2) Resumes for each of the individuals shown on the organizational chart and indicated as key to the operation of the activities to be funded under the program. There should be a corresponding resume for each of the key individuals noted and named on the organizational chart. Points will be awarded based on the quality of the resumes and on the ability of the key personnel to administer the program. Up to 5 points will be awarded. (3) A succession plan to be followed in the event of the departure of personnel key to the operation of the applicant's RMAP activities. Up to 5 points will be awarded. (4) Information indicating an understanding of microenterprise development concepts. Provide those parts of your policy and procedures manual that deal with the provision of loans, management of loan funds, and provision of TA. Up to 5 points will be awarded. (5) The applicant's most recent, and two-year's previous, financial statements. Points will be awarded based on the demonstrated ability of the applicant to maintain or grow its fund balance, its ability to manage one or more federal programs, and its capacity to manage multiple funding sources, including restricted and non-restricted funding sources, income, earnings, and expenditures. Up to 10 points will be awarded. (6) A copy of the applicant's organizational mission statement. The mission statement will be rated based on its relative connectivity to microenterprise development and general economic development and may or may not be a part of a larger statement. Up to 5 points will be awarded. (7) Information regarding the geographic service area to be served, which must be rural as defined, and include the number of counties or other jurisdictions to be served. Note that the applicant will not be scored on the size of the service area, but on its ability to fully cover the service area as described. Up to 10 points will be awarded. (b) Program loan application requirements for MDOs seeking to participate as RMAP microlenders with more than 3 years of experience. (1) History of provision of microloans. (i) Number and amount of microloans made during each of the three previous years. (ii) Number and amount of microloans made in rural areas, as defined, in each of the three years prior to the year in which the application is submitted. If the history of providing microloans in rural areas shows at least one loan made in: (A) Three or more consecutive years immediately prior to the application, 5 points will be awarded; (B) At least two of the years but not more than the three consecutive years immediately prior to this application, 3 points will be awarded; (C) At least 6 months, but not more than one year immediately prior to this application, 1 point will be awarded. (iii) Calculate and enter the total number of microloans made in rural areas as a percentage of the total number of all microloans made for each of the past three years. If the percentage of the total number of microloans made in rural areas is: (A) 75 percent or more, 5 points will be awarded; (B) At least 50 percent but less than 75 percent, 3 points will be awarded; (C) At least 25 percent but less than 50 percent, 1 point will be awarded. (iv) Enter the dollar amount of microloans made in rural areas as a percentage of the dollar amount of the total portfolio (rural and non-rural) of microloans made for each of the previous three years. If the percentage of the dollar amount of the microloans made in rural areas is: (A) 75 percent or more of the total amount, 5 points will be awarded; (B) At least 50 percent but less than 75 percent, 3 points will be awarded; (C) At least 25 percent but less than 50 percent, 1 point will be awarded. (v) Each applicant shall compare the diversity of its entire microloan portfolio to the demographic makeup of its service area (as determined by the latest applicable decennial census for the state) based on the number of microloans made during the three years preceding the subject application. Demographic groups shall include gender, racial and ethnic minority status, and disability (as defined in the Americans with Disabilities Act). Points will be awarded on the basis of how close the MDO's microloan portfolio matches the demographic makeup of its service area. A maximum of 5 points will be awarded. (A) If at least one loan has been made to each of the three demographic groups and if the percentage of loans made to each demographic group is 5 percent or less of their demographic makeup, 5 points will be awarded. (B) If at least one loan has been made to each demographic group and if the percentage of loans made to each demographic group is each between 5 to 10 percent or less of the demographic makeup, 3 points will be awarded. (C) If at least one loan has been made to each demographic group and if the percentage of loans made to one or more of the demographic groups is greater than 10 percent of the demographic makeup, 1 point will be awarded. (D) If no loans have been made to two or more demographic groups, no points will be awarded. (2) Portfolio management. (i) Enter the total number of the applicant's microloans paying on time for the three previous years. If the total number of microloans paying on time at the end of each year over the prior three years is: (A) 95 percent or more, 5 points will be awarded; (B) At least 85 percent but less than 95 percent, 3 points will be awarded; (C) Less than 85 percent, 0 points will be awarded. (ii) Enter the total number of microloans currently 30 to 90 days in arrears, or that have been written off over the three previous years. If the total number of these microloans is: (A) 5 percent or less of the total portfolio, 5 points will be awarded; (B) More than 5 percent, 0 points will be awarded. (3) History of provision of technical assistance. (i) Provide the total number of rural and non-rural microentrepreneurs and microenterprises that received both microloans and TA services for each of the previous three years. Of this total number, provide the percentage of rural microentrepreneurs and rural microenterprises that received both microloans and TA services for each of the previous three years. If the provision of both microloans and TA services to rural microentrepreneurs and rural microenterprises is demonstrated at a rate of: (A) 75 percent or more, 5 points will be awarded; (B) At least 50 percent but less than 75 percent, 3 points will be awarded; (C) At least 25 percent but less than 50 percent, 1 point will be awarded. (ii) Provide the percentage of the total number of rural microentrepreneurs and rural microenterprises by racial and ethnic minority, disabled, and/or gender that received both microloans and TA services for each of the previous three years. If the demonstrated provision of microloans and TA services to these rural microentrepreneurs and rural microenterprises is at a rate of: (A) 75 percent or more, 5 points will be awarded; (B) At least 50 percent but less than 75 percent, 3 points will be awarded; (C) At least 25 percent but less than 50 percent, 1 point will be awarded. (iii) Provide the ratio of TA clients that also received microloans, rounding to the nearest whole number, during each of the previous three years. If the ratio of clients receiving TA services to clients receiving microloans is: (A) Between 1:1 and 1:5, 5 points will be awarded. (B) Between 1:6 and 1:8, 3 points will be awarded. (C) A ratio of either 1:9 or 1:10, 1 point will be awarded. (4) Ability to provide technical assistance. (i) Applicants that have used more than one method of training and TA ( e.g., (ii) Applicants that provide success stories to demonstrate the effects of TA on their clients will be awarded 2 points. (iii) Applicants that provide evidence that they require evaluations by the clients of their training programs and indicate that the average level of evaluation scores is “good” or higher will be awarded 1 point. (5) Proposed administrative expenses to be spent from TA grant funds. (i) Less than 5 percent of the TA grant funds, 5 points will be awarded; (ii) Equal to 5 percent but less than 8 percent, 3 points will be awarded; (iii) Equal to 8 percent or greater, 0 points will be awarded. (c) Application requirements for MDOs seeking to participate as RMAP microlenders with 3 years or less experience. (1) The applicant must provide a narrative work plan that clearly indicates its intention for the use of loan and grant funds. Provide goals and milestones for planned microlending and TA activities. In relation to the information requested in paragraph (a) of this section, the applicant must describe how it will incorporate its mission statement, utilize its employees, and maximize its human and capital assets to meet the goals of this program. The applicant must provide its strategic plan and organizational development goals and clearly indicate its lending goals for the five years after the date of application. The narrative work plan should be not more than five pages in length. Up to a maximum of 10 points will be awarded. (2) The applicant will provide the date that it began business as an MDO or other provider of business education and/or facilitator of capital. This date will reflect when the applicant became licensed to do business by the Secretary of State, or tribal equivalent, in which it is registered and engaged regularly paid staff to conduct business on a daily basis. If the applicant has been in business for: (i) More than 2 years but less than 3 years, 5 points will be awarded; (ii) At least 1 year, but not more than 2 years, 3 points will be awarded; (iii) At least 6 months, but not more than 1 year, 1 point will be awarded; (iv) Less than 6 months, or more than 3 full years, 0 points will be awarded. (If more than 3 full years, the applicant must apply under the provisions for MDOs with more than 3 years of experience as specified in paragraph (b) of this section.) (3) The applicant must describe in detail any microenterprise development training received by it as a whole, or its employees as individuals, to date. The narrative may refer reviewers to already submitted resumes to save space. The training received will be rated on its topical variety, the quality of the description, and its relevance to the organization's strategic plan. The applicant should not submit training brochures or conference announcements. Up to a maximum of 10 points will be awarded. (4) The applicant must indicate its current number of employees, those that concentrate on rural microentrepreneurial development, and the current average caseload for each. Indicate how the caseload ratio does or does not optimize the applicant's ability to perform the services described in the work plan. Discuss how Agency grant funds will be used to assist with TA program delivery and how funding of the program loan application will affect the portfolio. Up to 5 points will be awarded. (5) Applicants may submit a maximum of five (5) letters of support with one point awarded for each letter. Support letters should be signed and dated and come from potential beneficiaries and other local organizations. Letters received from Congressional members and technical assistance providers will not be included in the count of support letters received. Additionally, identical form letters signed by multiple potential beneficiaries and/or local organizations will not be included in the count of support letters received. The applicant must indicate any training organizations with which it has a working relationship. Provide contact information for references regarding the applicant's capacity to perform the work in the plan provided. Up to a maximum of five (5) points will be awarded. (6) Describe any plans for continuing training relationship(s), including ongoing or future training plans and goals, and the timeline for the same. Up to 5 points will be awarded. (7) The applicant will describe its internal benchmarking system for determining client success, reporting on client success, and following client success for up to 5 years after completion of a training relationship. Up to 10 points will be awarded. (8) The applicant will identify its proposed administrative expenses to be spent from TA grant funds. The maximum total number of points under this criterion is 5. If the percentage of grant funds to be used for administrative purposes is: (i) Less than or equal to 5 percent of the TA grant funds, 5 points will be awarded; (ii) More than 5 percent but less than 8 percent, 3 points will be awarded; (iii) Equal to 8 percent or greater, 0 points will be awarded. (d) Application requirements for MDOs seeking TA-only grants. (1) History of provision of TA. (i) Provide the total number of rural and non-rural microentrepreneurs and microenterprises that received both TA services and resultant microloans for each of the previous three years. Of this total number, provide the percentage of rural microentrepreneurs and rural microenterprises that received both TA services and resultant microloans for each of the previous three years. If the provision of both TA services and resultant microloans to rural microentrepreneurs and rural microenterprises is demonstrated at a rate of: (A) 75 percent or more, 5 points will be awarded; (B) At least 50 percent but less than 75 percent, 3 points will be awarded; (C) At least 25 percent but less than 50 percent, 1 point will be awarded. (ii) Provide the percentage of the total number of rural microentrepreneurs by racial and ethnic minority, disabled, and/or gender that received both microloans and TA services for each of the previous three years. If the demonstrated provision of TA and resultant microloans to these rural microentrepreneurs when compared to the total number of microentrepreneurs assisted, is at a rate of: (A) 75 percent or more, 10 points will be awarded; (B) At least 50 percent but less than 75 percent, 7 points will be awarded; (C) At least 25 percent but less than 50 percent, 5 points will be awarded. (iii) Provide the ratio of TA clients that also received microloans during each of the last three years, rounded to the nearest whole number. If the ratio of clients receiving TA to clients receiving microloans is: (A) Between 1:1 and 1:5, 5 points will be awarded. (B) Between 1:6 and 1:8, 3 points will be awarded. (C) Either 1:9 or 1:10, 1 point will be awarded. (2) Ability to provide TA. (i) Applicants that have used more than one method of training and TA ( e.g., (ii) Applicants that provide success stories to demonstrate the effects of TA on their clients will be awarded points under either of the following paragraphs, but not both: (A) News stories that highlight businesses made successful as a result of the applicant's TA; 5 points will be awarded. (B) Internal stories that highlight businesses made successful as a result of TA, 3 points. (iii) Applicants that provide evidence that they require evaluations by the clients of their training programs will be awarded 3 points. Applicants will provide the total number of evaluations received and the average score from the evaluations received. An additional two points will be awarded if the total evaluation scores are above an average of 3.0 on a five-point scale, with points determined by the client ratings on a declining scale as follows: (A) Extremely Satisfied, 5 points. (B) Satisfied, 4 points. (C) Average, 3 points. (D) Dissatisfied, 2 points. (E) Very Unsatisfied, 1 point. (iv) Applicants that present well-written narrative information regarding their programs and services to be delivered and their outreach efforts within the service area that is clearly and concisely written and is five pages or less will be awarded up to a maximum of 5 points. (3) Technical assistance plan. (4) Proposed administrative expenses to be spent from TA grant funds. (i) Less than or equal to 5 percent of the TA grant funds, 5 points will be awarded; (ii) More than 5 percent but less than 8 percent, 3 points will be awarded; (iii) Equal to 8 percent or greater, 0 points will be awarded. (e) Re-application requirements for participating microlenders with more than 5 years of experience as a microlender under this program. (i) A letter of request for funding stating the amount of loan and/or grant funds being requested; (ii) An indication of the loan and/or grant amounts being requested accompanied by a completed Form SF 424 and any pertinent attachments; (iii) An indication of the number and percent of the MDO's microentrepreneurs and microenterprises remaining in business for two years or more after microloan disbursement from program funds; and (iv) A recent resolution of the applicant's Board of Directors approving the application for debt. (2) The Agency, using this request and data available in the reports submitted under previous funding(s), will review the overall program performance of the applicant over the life of its participation in the program to determine its continued qualification for subsequent funds. Requirements include: (i) A loan default rate of 5 percent or less; (ii) A pattern of delinquencies during the period of participation in this program of 10 percent or less; (iii) A pattern of use of TA dollars that indicates at least one in ten TA clients receive a microloan; (iv) A statement discussing the need for more funding, accompanied by account documentation showing the amounts in each of the RMRF and LLRF accounts established to date; and (v) A pattern of compliance with program reporting requirements. (3) Shortened applications under this section will be rated on a pass or fail basis. Passing applications will be assigned a score of 90 points and will be ranked accordingly in the quarterly competitions. Failing applications under this section will be scored 0 and experienced MDOs may be required to complete the application requirements of paragraph (b) of this section. § 4280.317 Selection of applications for funding. All eligible applications received will be scored using the scoring criteria specified in § 4280.316 and funded in descending order from the highest total score to applications receiving 60 points, subject to the authorization of appropriations for the Federal FY. If two or more applications have the same score and available funds cannot fund the individual projects, the Administrator may prioritize such applications to help the program achieve overall geographic diversity. (a) Timing and submission of applications. (2) Applications will be accepted on a continuing basis at any Rural Development State Office and will compete nationally for available funds on a quarterly basis using Federal fiscal quarters. (3) Applications received will be reviewed, scored, and ranked quarterly. Unless withdrawn by the applicant, the Agency will retain unsuccessful applications that score 60 points or more for consideration in subsequent reviews, through a total of four quarterly reviews. Applications unsuccessful after competing for funds in four quarters will be returned to the applicant. (b) Availability of funds. (c) Applicant notification. (d) Closing. §§ 4280.318-4280.319 [Reserved] § 4280.320 Grant administration. (a) Oversight. (1) On a quarterly basis, within 30 days after the end of each Federal fiscal quarter, the microlender will provide to the Agency an Agency-approved quarterly report containing such information as the Agency may require to ensure that funds provided are being used for the purposes for which the grant was made, including: (i) Narrative reporting information as required by Office of Management and Budget (OMB) circulars and successor regulations. This narrative will include information on the MDO's TA, training, and/or enhancement activity, and grant expenses, milestones met, or unmet, explanation of difficulties, observations and other such information; (ii) If requesting grant funds at the time of reporting, an executed SF-270 form and a brief description of the proposed activity-based expenditures are required. (2) If a microlender has more than one grant from the Agency, a separate report must be made for each grant. (3) Other reports may be required by the Agency from time to time in the event of poor performance or other such occurrences that require more than the usual set of reporting information. (b) Payments. § 4280.321 Grant and loan servicing. In addition to the ongoing oversight of the participating MDOs, all grants will be serviced in accordance with applicable regulations, including 7 CFR part 1951, subparts E and O, 7 CFR part 3, and the Office of Management and Budget (OMB) regulations including, but not limited to, 2 CFR parts 200, 215, 220, 230, and OMB Circulars A-110 and A-133. Loans to microlenders will be serviced in accordance with 7 CFR part 1951, subparts E, O, and R, and OMB Circular A-129. § 4280.322 Loans from the microlenders to microentrepreneurs. The primary purpose of making a program loan to a microlender is to enable that microlender to make microloans to rural microenterprises and microentrepreneurs. It is the responsibility of each microlender to make microloans in such a fashion that the terms and conditions of the microloan will support microborrower success while enabling the microlender to repay its loan from the Agency. It is the responsibility of each microborrower to repay the microlender in accordance with the terms and conditions agreed to with the microlender. The microlender is responsible for full repayment to the Agency of its loan regardless of the performance of its microloan portfolio. (a) Maximum microloan amount. (b) Microloan terms and conditions. (1) No microloan may have a term of more than 10 years; (2) The interest rate charged to the microborrower will be established at or before the microloan closing and at such a rate that the microloan is affordable to the microborrower and provides a reasonable margin of earnings to the microlender. (c) Microloan insurance requirements. (d) Credit elsewhere test. (e) Fair credit requirements. (f) Eligible microloan purposes. (1) Working capital; (2) The purchase of furniture, fixtures, supplies, inventory or equipment; (3) Debt refinancing; (4) Business acquisitions; and (5) The purchase or lease of real estate that is already improved and will be used for the location of the subject business only, provided no demolition or construction will be accomplished with program funds. Neither interior decorating, nor the affixing of chattel to walls, floors, or ceilings are considered to be demolition or construction. (g) Military personnel. § 4280.323 Ineligible microloan purposes and uses. Agency loan funds will not be used for the payment of microlender administrative costs or expenses and microlenders may not make microloans under the program for any of the purposes and uses identified as ineligible in paragraphs (a) through (n) of this section. (a) Construction costs including property demolition, renovation, elimination of walls, or property additions. (b) The financing of timeshares, apartments, duplexes, or other residential housing. (c) Assistance that will cause a conflict of interest or the appearance of a conflict of interest including but not limited to: (1) Financial assistance to principals, directors, officers, or employees of the microlender, or their close relatives, as defined; or (2) Financial assistance to any entity which would appear to benefit the microlender or its principals, directors, or employees, or their close relatives, as defined, in any way other than the normal repayment of debt. (d) Distribution or payment to a microborrower when such will use any portion of the microloan for other than business purposes. (e) Microloans to a charitable institution not gaining sufficient revenue from business sales or services to support the operation and repay the microloan. (f) Microloans to a fraternal organization. (g) Any microloan to an applicant that has an RMAP-funded microloan application pending with another microlender or that has an RMAP-funded microloan outstanding with another microlender that would cause the applicant to owe a combined amount of more than $50,000 to one or more microlenders under the program. (h) Assistance to USDA Rural Development employees, or their close relatives, as defined. (i) Microloans for any illegal activity. (j) Any project that is in violation of either a Federal, State, or local environmental protection law, regulation, or enforceable land use restriction unless the microloan will result in curing or removing the violation. (k) Loans supporting explicitly religious activities, such as worship, religious instruction or proselytization. (l) Golf courses, race tracks, or gambling facilities. (m) Funding of any political or lobbying activities. (n) Lines of credit. §§ 4280.324-4280.399 [Reserved] § 4280.400 OMB control number. The information collection requirements contained in this subpart have been approved by the Office of Management and Budget (OMB) and have been assigned OMB control number 0570-0062. A person is not required to respond to this collection of information unless it displays a currently valid OMB control number. Subpart E—Rural Business Development Grants Source: 80 FR 15667, Mar. 25, 2015, unless otherwise noted. General § 4280.401 Purpose. This subpart implements the RBDG program administered by the Agency. Grants made under this subpart will be made to eligible entities for use in funding various business opportunity and business enterprise Projects that serve Rural Areas. § 4280.402 [Reserved] § 4280.403 Definitions. Administrator. Agency. Agriculture Production. Arm's-length Transaction. Business Support Centers. Conflict of Interest. Departmental Grant Regulations. Economic Development. Indian Tribe (Tribal), Tribal Government and/or Federally Recognized Tribes. Industrial Site. Long-term. Nonprofit. Other Business Development. Planning. Priority Communities. Project. i.e., Public Bodies/Government Entity. Rural and Rural Area. et seq. Small and Emerging Business. State. Technical Assistance. [80 FR 15667, Mar. 25, 2015, as amended at 88 FR 86570, Dec. 14, 2023] § 4280.404 Exception authority. The Administrator may make an exception, on a case-by-case basis, to any requirement or provision of this subpart that is not inconsistent with any authorizing statute or applicable law if the Administrator determines that application of the requirement or provision would adversely affect the Government's financial interest. § 4280.405 Review or appeal rights. A person may seek a review of an Agency decision under this subpart from the appropriate Agency official that oversees the program in question or appeal to the National Appeals Division in accordance with 7 CFR part 11. § 4280.406 Conflict of interest. (a) General. (b) Assistance to employees, relatives, and associates. (c) Member/delegate clause. § 4280.407 Statute and regulation references. All references to statutes and regulations are to include any and all successor statutes and regulations. § 4280.408 U.S. Department of Agriculture departmental regulations and laws that contain other compliance requirements. (a) Departmental regulations. (b) Equal opportunity and nondiscrimination. et seq. et seq. (c) Civil rights compliance. et seq., et seq., (1) Initial compliance reviews will be conducted by the Agency prior to funds being obligated. (2) Grants will require one subsequent compliance review following Project completion. This will occur prior to the last disbursement of grant funds. (d) Environmental requirements. (1) Any required environmental review must be completed by the Agency prior to the Agency obligating any funds. (2) The applicant will be notified of all specific compliance requirements, including, but not limited to, the publication of public notices, and consultation with State Historic Preservation Offices (or Tribal Historic Preservation Offices where appropriate) and the U.S. Fish and Wildlife Service. (3) A site visit by the Agency may be scheduled, if necessary, to determine the scope of the review. (4) Applications for Technical Assistance or Planning Projects are generally excluded from the environmental review process by 7 CFR 1970.53 provided the assistance is not related to the development of a specific site. However, as further specified in 7 CFR 1970.53, the grantee for a Technical Assistance grant, in the process of providing Technical Assistance, must consider the potential environmental impacts of the recommendations provided to the recipient of the Technical Assistance as requested by the Agency and in accordance with 7 CFR part 1970. (5) Applicants for grant funds must consider and document within their plans the important environmental factors within the Planning area and the potential environmental impacts of the plan on the Planning area, as well as the alternative Planning strategies that were reviewed. (6) Whenever an applicant files an application that includes a direct construction Project and a plan, they must have a separate environmental evaluation. (e) Discrimination complaints Who may file. (2) Time for filing. (f) Uniform Relocation and Real Property Acquisition Policies Act. (g) Floodplains and wetlands. [80 FR 15667, Mar. 25, 2015, as amended at 81 FR 11052, Mar. 2, 2016] § 4280.409 [Reserved] § 4280.410 Other laws and regulations that contain compliance requirements for this program. (a) Equal employment opportunity. (b) Architectural barriers. (c) Uniform relocation assistance. (d) Drug-free workplace. (e) Debarment and suspension. (f) Intergovernmental review of Federal programs. (g) Restrictions on lobbying. (h) Earthquake hazards. (i) Affirmative fair housing. (j) Flood hazard insurance. (k) Uniform administrative requirements, cost principles, and audit requirements for Federal awards. (l) Planning and performing construction and other development. (m) Transparency Act. § 4280.411 Forms, guides, and attachments. All forms, guides, and attachments referenced in this subpart are available online at: http://forms.sc.egov.usda.gov/eForms/ §§ 4280.412-4280.414 [Reserved] Rural Business Development Grants § 4280.415 Rural Business Development Grants. Sections 4280.416 through 4280.439 identify the provisions that the Agency will use for making awards for Rural Business Development Grants. Eligibility § 4280.416 Applicant eligibility. To receive an RBDG under this subpart, an applicant must meet the requirements specified in paragraphs (a) through (e) of this section. If an award is made to an applicant, that applicant (grantee) must continue to meet the requirements specified in this section. If the grantee does not, then grant funds may be recovered from the grantee by the Agency in accordance with Departmental Regulations. (a) Type of applicant. (1) A Public Body/Government Entity; (2) An Indian Tribe; or (3) A Nonprofit entity. (b) Financial strength and expertise. (1) Financial strength will be analyzed by the Agency based on financial data provided in the application. The analysis will consider the applicant's tangible net worth, which must be positive, and whether the applicant has dependable sources of revenue or a successful history of raising revenue sufficient to meet cash requirements. (2) Expertise will be analyzed by the Agency based on the applicant staff's training and experience in activities similar to those proposed in the application and, if consultants will be used, on the staff's experience in choosing and supervising consultants. (c) Universal identifier and system for awards management. (1) Be registered in the System for Awards Management (SAM) prior to submitting an application; (2) Maintain an active SAM registration with current information at all times during which it has an active Federal award or an application under consideration by the Agency; and (3) Provide its Unique Entity Identifier (UEI) in each application it submits to the Agency. The UEI is included on the Standard Form (SF) 424, “Application for Federal Assistance.” (d) Delinquent debt. (e) Legal authority and responsibility. [80 FR 15667, Mar. 25, 2015, as amended at 89 FR 34959, May 1, 2024] § 4280.417 Project eligibility. For a Project to be eligible for funding under this subpart, the proposed Project must meet each of the requirements specified in paragraphs (a) through (e) of this section. (a) Types of projects. (1) Business opportunity Projects. (i) Identify and analyze business opportunities that will use local rural materials or human resources. This includes opportunities in export markets, as well as feasibility and business plan studies; (ii) Identify, train, and provide Technical Assistance to existing or prospective rural entrepreneurs and managers; (iii) Establish Business Support Centers and otherwise assist in the creation of new Rural businesses; (iv) Conduct local community or multi-county Economic Development Planning; (v) Conduct leadership development training of existing or prospective adult rural entrepreneurs and managers; (vi) Establish centers for training, technology, and trade that will provide training to Rural businesses in the utilization of interactive communications technologies to develop international trade opportunities and markets; or (vii) Pay reasonable fees and charges for professional services necessary to conduct the Technical Assistance, training, or planning functions. (2) Business enterprise projects. (i) Acquisition and development of land, easements and rights-of-way; (ii) Construction, conversion, enlargement, repairs or modernization of buildings, plants, machinery, equipment, access streets and roads, parking areas, utilities, and pollution control and abatement facilities; (iii) Provision of loans for startup operating cost and working capital; (iv) Reasonable fees and charges for professional services necessary for the planning and development of the Project; (v) Establishment of a revolving loan fund to provide financial assistance to third parties through a loan; and (vi) Establishment, expansion, and operation of Rural distance learning networks or development of Rural learning programs that provide educational instruction or job training instruction related to potential employment or job advancements for adult students; (vii) Provision of Technical Assistance for Small and Emerging Businesses, including but not limited to feasibility studies and business plans; and/or (viii) Provision of Technical Assistance and training to rural communities for the purpose of improving passenger transportation services or facilities. (b) Result of projects. (2) For business enterprise type grants, the Project must have a reasonable prospect that it will result in the development or financing of Small and Emerging Businesses. (c) Basis for success or failure. (d) Local and area-wide strategic plans. (e) An applicant is permitted to use up to 10 percent of the amount provided under this subpart to construct, improve, or acquire broadband infrastructure related to the project financed, subject to the requirements of 7 CFR part 1980, subpart M. [80 FR 15667, Mar. 25, 2015, as amended at 85 FR 57085, Sept. 15, 2020] §§ 4280.418-4280.420 [Reserved] Funding Provisions § 4280.421 Term requirement. A grant may be considered for the amount needed to assist with the completion of a proposed Project, provided that the Project can reasonably be expected to be completed within 1 full year after it has begun. § 4280.422 Joint funding. To the extent permitted by law, Agency grant funds may be used jointly and in proportion with funds furnished by the grantee or from other sources including Agency loan funds. § 4280.423 Ineligible uses of grant funds. Grant funds may not be used towards any of the uses identified in paragraphs (a) through (n) of this section. (a) Duplicate current services or substitute support previously provided. If the current service is inadequate, however, grant funds may be used to expand the level of effort or services beyond what is currently being provided. (b) Pay costs of preparing the application package for funding under this program or any other program. (c) Pay costs for any expenses incurred prior to receipt of a full application, except for those permitted under Departmental Regulations. (d) Fund political activities. (e) Pay for assistance to any private business enterprise which does not create and/or support jobs in the United States. (f) Pay any judgment or debt owed to the United States. (g) Fund Agriculture Production either directly or through horizontally integrated livestock operations except for commercial nurseries, timber operations or limited Agricultural Production related to Technical Assistance Projects. The following are not considered Agriculture Production: (1) Aquaculture, including conservation, development, and utilization of water for aquaculture; (2) Commercial fishing; (3) Commercial nurseries engaged in the production of ornamental plants and trees and other nursery products such as bulbs, flowers, shrubbery, flower and vegetable seeds, sod, and the growing of plants from seed to the transplant stage; (4) Forestry, which includes businesses primarily engaged in the operation of timber tracts, tree farms, and forest nurseries and related activities such as reforestation; or (5) The growing of mushrooms or hydroponics. (h) To finance comprehensive area-wide type Planning. This does not preclude the use of grant funds for Planning for a given Project. (i) To make loans when the rates, terms, and charges for those loans are not reasonable or would be for purposes not eligible under 7 CFR part 4274, subpart D. (j) For programs operated by cable television systems. (k) To fund a part of a Project that is dependent on other funding unless there is a firm commitment of the other funding to ensure completion of the Project. (l) To pay for Technical Assistance that duplicates assistance provided to implement an action plan funded by the Forest Service (FS) under the National Forest-Dependent Rural Communities Economic Diversification Act for 5 continuous years from the date of grant approval by the FS. To avoid duplicate assistance, the grantee shall coordinate with FS and the Agency to ascertain if a grant has been made in a substantially similar geographical or defined local area in a State for Technical Assistance under the FS program. The grantee will provide documentation to FS and the Agency regarding the contact with each agency. (m) Pass through grants. Pass through grants are for, but not limited to: (1) The purchase, refurbishing, or remodeling of real estate for use as a business incubator without charging a fair market rental; (2) The purchase of equipment for use by an ultimate recipient without charging a fair market rental; and (3) The making of a Revolving Loan Fund (RLF) loan without taking appropriate security to reasonably assure repayment of the loan. (n) For a Project that would result in the transfer of existing employment or business activity more than 25 miles from its existing location. §§ 4280.424-4280.426 [Reserved] Applying for a Grant § 4280.427 Application. Applications for an RBDG grant as specified in § 4280.417(a)(1) and (2) must contain the following: (a) An original and one copy of SF 424, “Application For Federal Assistance (For Non-construction);” (b) Copies of applicant's organizational documents showing the applicant's legal existence and authority to perform the activities under the grant; (c) A proposed scope of work, including a description of the proposed Project, e.g., (d) A written narrative that includes, at a minimum, the following items: (1) An explanation of why the Project is needed, the benefits of the proposed Project, and how the Project meets the grant eligible purposes; (2) Area to be served, identifying each governmental unit, i.e. (3) Description of how the Project will coordinate Economic Development activities with other Economic Development activities within the Project area; (4) Business to be assisted, if appropriate, and Economic Development to be accomplished; (5) An explanation of how the proposed Project will result in newly created, increased, or supported jobs in the area and the number of projected new and supported jobs within the next 3 years; (6) A description of the applicant's demonstrated capability and experience in providing the proposed Project assistance or similar Economic Development activities, including experience of key staff members and persons who will be providing the proposed Project activities and managing the Project; (7) The method and rationale used to select the areas and businesses that will receive the service; (8) A brief description of how the work will be performed including whether organizational staff or consultants or contractors will be used; and (9) Other information the Agency may request to assist it in making a grant award determination; (e) The latest 3 years of financial information to show the applicant's financial capacity to carry out the proposed work. If the applicant is less than 3 years old, at a minimum, the information should include all balance sheet(s), income statement(s) and cash flow statement(s). A current audited report is required if available; (f) Intergovernmental review comments from the State Single Point of Contact, or evidence that the State has elected not to review the program under Executive Order 12372; (g) Documentation regarding the availability and amount of other funds to be used in conjunction with the funds from the RBDG; (h) A budget which includes salaries, fringe benefits, consultant costs, indirect costs, and other appropriate direct costs for the Project; and (i) RBDG construction Project grants must conform with 7 CFR part 1924, subpart A requirements. § 4280.428 Strategic economic and community development. Applicants with projects that support the implementation of Strategic Community Investment Plans are encouraged to review and consider 7 CFR part 1980, subpart K, which contains provisions for providing priority to projects that support the implementation of Strategic Community Investment Plans on a multi-jurisdictional and multi-sectoral basis. [85 FR 59395, Sept. 22, 2020] § 4280.429 [Reserved] § 4280.430 Notification of decision. When the Agency has determined that an application is not eligible or that no further action will be taken, the Agency will notify the applicant in writing of the reasons why the application was not favorably considered and provide any appeal rights. §§ 4280.431-4280.433 [Reserved] Processing and Scoring Applications § 4280.434 General processing and scoring provisions. The Agency will review each application for assistance in accordance with the priorities established in § 4280.435. The Agency will assign each application a priority rating and will select applications for funding based on the priority ratings and the total funds available to the program. (a) Applications. (b) Unfunded applications. § 4280.435 Scoring criteria. The Agency will use the criteria in this section to score applications for purposes identified under § 4280.417(a)(1)and (2). (a) Leveraging. (1) If Rural Development's portion of Project funding is: (i) Less than 20 percent—30 points; (ii) 20 but less than 50 percent—20 points; (iii) 50 but less than 75 percent—10 points; or (iv) 75 percent or more—0 points. (2) [Reserved] (b) Points will be awarded for each of the following criteria met by the community or communities that will receive the benefit of the grant. However, regardless of the mathematical total of points indicated by paragraphs (b)(1) through (4) of this section, total points awarded under this paragraph (b) must not exceed 40. (1) Trauma. (2) Economic distress. (3) Long-term poverty. (4) Population decline. (c) Population. (1) Under 5,000 population—15 points; (2) Between 5,000 and less than 15,000 population—10 points; or (3) Between 15,000 and 25,000 population—5 points. (d) Unemployment. (1) exceeds the State rate by 25 percent or more—20 points; (2) exceeds the State rate by less than 25 percent—10 points; or (3) is equal to or less than the State rate—0 points. (e) Median household income. (1) Less than poverty line—25 points; (2) More than poverty line but less than 65 percent of State MHI—15 points; (3) Between 65 and 85 percent of State MHI—10 points; or (4) Greater than 85 percent State MHI—0 points. (f) Experience. (1) 10 or more years-30 points; (2) At least 5 but less than 10 years-20 points; (3) At least 3 but less than 5 years-10 points; or (4) At least 1 but less than 3 years-5 points. (g) Small business start-up or expansion. (h) Jobs created or supported. (1) One job for less than $5,000—25 points; (2) one job for $5,000 but less than $10,000—20 points; (3) one job for $10,000 but less than $15,000—15 points; (4) one job for $15,000 but less than $20,000—10 points; or (5) one job for $20,000 but less than $25,000—5 points. (i) Size of grant request. (1) less than $100,000—25 points; (2) $100,000 to $200,000—15 points; or (3) more than $200,000 but not more than $500,000—10 points. (j) Indirect cost. (k) Discretionary points. §§ 4280.436-4280.438 [Reserved] Grant Awards and Agreement § 4280.439 Grant awards and agreements. The Agency will award and administer RBDG grants in accordance with applicable Departmental regulations, this subpart, and the unauthorized grant provisions of 7 CFR part 1951, subpart O. (a) Letter of conditions. (b) Applicant's intent to meet conditions. §§ 4280.440-4280.442 [Reserved] Post Award Activities and Requirements § 4280.443 Grant monitoring and servicing. RBDG grants will be monitored and serviced in accordance with the grant agreement, this subpart, and 2 CFR chapter IV. §§ 4280.444-4280.447 [Reserved] § 4280.448 Transfers and assumptions. The Agency will approve transfer and assumption requests on grants awarded under this subpart on a case by case basis, and then only to eligible entities under § 4280.416. §§ 4280.449-4280.499 [Reserved] § 4280.500 OMB control number. The reporting and recordkeeping requirements contained in this part have been approved by the Office of Management and Budget (OMB) under the provisions of 44 U.S.C. chapter 35 and have been assigned OMB control number 0570-0070 in accordance with the Paperwork Reduction Act of 1995. You are not required to respond to this collection of information unless it displays a valid OMB control number. [88 FR 86570, Dec. 14, 2023]

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