7 CFR Part 4280 — Loans and Grants

PART 4280—LOANS AND GRANTS Authority: 7 U.S.C. 1989(a), 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 General Source: 86 FR 22309, Apr. 27, 2021, unless otherwise noted. § 4280.101 Purpose. This subpart contains the procedures and requirements for providing the following financial assistance under the Rural Energy for America Program (REAP): (a) Grants, or a combination grant and guaranteed loan, for the purpose of purchasing and installing Renewable Energy Systems (RES) and Energy Efficiency Improvements (EEI); (b) Grants to assist agricultural producers and rural small businesses by conducting Energy Audits (EA) and providing recommendations and information on Renewable Energy Development Assistance (REDA); and (c) Grants or guaranteed loans, or a combination grant and guaranteed loan to an applicant or borrower pursuant to 7 CFR 1980, Subpart M Special Authority to Enable Funding of Broadband and Smart Utility Facilities Across Select Rural Development Programs. A Borrower or applicant receiving funding as referenced in paragraphs (a) or (b) of this section 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 1980, Subpart M. § 4280.102 Organization of subpart. (a) Sections 4280.103 through 4280.111 discuss definitions; exception authority; review or appeal rights; conflict of interest; USDA Departmental Regulations; other applicable laws; ineligible applicants, grantees, and owners; general applicant, application, and funding provisions; and notifications, which are applicable to all of the funding programs under this subpart. (b) Sections 4280.112 through 4280.125 discuss the requirements specific to RES and EEI grants. Sections 4280.112 and 4280.113 discuss, respectively, applicant and project eligibility. Section 4280.114 addresses ineligible projects. Section 4280.115 addresses funding provisions for these grants. Sections 4280.116 through 4280.120 address grant application content, technical merit determination, and required documentation. Sections 4280.121 through 4280.124 address the scoring, selection, awarding and administering, and servicing of these grant applications. Section 4280.125 addresses construction planning and development. (c) Section 4280.137 presents the process by which the Agency will make combined loan guarantee and grant funding available for RES and EEI projects. (d) Sections 4280.149 through 4280.159 present the process by which the Agency will make EA and REDA grant funding available. These sections cover applicant and project eligibility, grant funding, application content, evaluation, scoring, selection, awarding and administering, and servicing. (e) Appendices A through C cover technical report requirements. Appendix A applies to EEI projects; Appendix B applies to RES projects with Total Project Costs of Less Than $200,000, but more than $80,000; and Appendix C applies to RES projects with Total Project Costs $200,000 and Greater. Appendices A and B do not apply to RES and EEI projects with Total Project Costs of $80,000 or less, respectively. Instead, technical report requirements for these projects are found in § 4280.120. (f) Appendix D covers contents of feasibility study. § 4280.103 Definitions. The following definitions are applicable to the capitalized terms used in this part. Administrator. Agency. Agricultural producer. Anaerobic digester. Applicant. (2) For EA and REDA grants, a unit of State, Tribal, or local government; a land-grant college or university or other institution of higher education; a rural electric cooperative; a public power entity; council; or an Instrumentality of a State, Tribal, or local government that is seeking an EA or REDA grant under this subpart. Bioenergy project. Biofuel. Biogas. Byproduct. Commercially available. (1) A domestic or foreign system that: (i) Has both a proven and reliable operating history and proven performance data for at least 1 year specific to the use and operation to the proposed application; (ii) Is based on established design and installation procedures and practices and is replicable; (iii) Has professional service providers, trades, large construction equipment providers, and laborers who are familiar with installation procedures and practices; (iv) Has proprietary and balance of system equipment and spare parts that are readily available; (v) Has service that is readily available to properly maintain and operate the system; and (vi) Has an existing established warranty that is valid in the United States for major parts and labor; or (2) A domestic or foreign system that has been certified by a recognized industry organization whose certification standards are acceptable to the Agency. Complete application. Costs incurred. Council. Departmental regulations. Design/Build method. Eligible project costs. Energy assessment. (1) If the project's total project cost is greater than $80,000, the energy assessment must be conducted by either an energy auditor or an energy assessor or an individual supervised by either an energy assessor or energy auditor. The final energy assessment must be validated and signed by the energy assessor or energy auditor who conducted the energy assessment or by the supervising energy assessor or energy auditor of the individual who conducted the assessment, as applicable. (2) If the project's total project cost is $80,000 or less, the energy assessment may be conducted in accordance with paragraph (1) of this definition or by an individual or entity that has at least 3 years of experience and completed at least five energy assessments or energy audits on similar type projects. Energy assessor. Energy audit. Energy auditor. (1) A certified energy auditor certified by the Association of Energy Engineers; (2) A certified energy manager certified by the Association of Energy Engineers; (3) A licensed professional engineer in the State in which the audit is conducted with at least 1-year experience and who has completed at least two similar type energy audits; or (4) An individual with a 4-year engineering or architectural degree with at least 3 years of experience and who has completed at least five similar type energy audits. Energy efficiency improvement (EEI). Existing business. Feasibility study. Federal fiscal year. Financial Assistance Agreement (Form RD 4280-2, Rural Business-Cooperative Service Financial Assistance Agreement). Financial feasibility. Geothermal direct generation. Geothermal electric generation. Hybrid. Hydroelectric source. Hydrogen project. Immediate family(ies). Inspector. Institution of Higher Education. Instrumentality. Interconnection agreement. Matching funds. Ocean energy. e.g., Passive investor. Person. Power purchase agreement. Public Power Entity. Qualified Consultant(s). Rated Power. Refurbished. Renewable biomass. (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). Renewable energy development assistance (REDA). Renewable energy site assessment. Renewable Energy System (RES). (1) Distribution components necessary to move energy produced by such system to initial point of sale; and (2) other components and ancillary infrastructure of such system, such as a storage system; however, such system may not include a mechanism for dispensing energy at retail. Renewable energy technical assistance. Retrofitting. Rural or rural area. (1) 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 has been determined to be “rural in character” as follows: (i) The determination that an area is “rural in character” will be made by the Under Secretary of Rural Development. The process to request a determination under this provision is outlined in paragraph (1)(ii) of this definition. The determination that an area is “rural in character” under this definition will apply to areas that are within: (A) An urbanized area that has two points on its boundary that are at least 40 miles apart, which is not contiguous or adjacent to a city or town that has a population of greater than 150,000 inhabitants or the urbanized area of such a city or town; or (B) An urbanized area contiguous and adjacent to a city or town of greater than 50,000 inhabitants that is within 1/4 (ii) Units of local government may petition the Under Secretary of Rural Development for a “rural in character” designation by submitting a petition to the appropriate Rural Development State Director for recommendation to the Administrator on behalf of the Under Secretary. The petition shall document how the area meets the requirements of paragraph (1)(i)(A) or (B) of this definition and discuss why the petitioner believes the area is “rural in character,” including, but not limited to, the area's population density, demographics, and topography and how the local economy is tied to a rural economic base. Upon receiving a petition, the Under Secretary will consult with the applicable Governor or leader in a similar position and request comments to be submitted within 5 business days, unless such comments were submitted with the petition. The Under Secretary will release to the public a notice of a petition filed by a unit of local government not later than 30 days after receipt of the petition by way of publication in a local newspaper and posting on the Agency's website at https://www.rd.usda.gov, (iii) Rural Development State Directors may also initiate a request to the Under Secretary to determine if an area is “rural in character.” A written recommendation should be sent to the Administrator, on behalf of the Under Secretary, that documents how the area meets the statutory requirements of paragraph (1)(i)(B) of this definition and discusses why the State Director believes the area is “rural in character,” including, but not limited to, the area's population density, demographics, topography, and how the local economy is tied to a rural economic base. Upon receipt of such a request, the Administrator will review the request for compliance with the “rural in character” provisions and make a recommendation to the Under Secretary. Provided a favorable determination is made, the Under Secretary will consult with the applicable Governor or leader in a similar position and request comments within 10 business days, unless the comments were submitted with the request. A public notice will be published by the State Office in accordance with paragraph (1)(ii) of this definition. There is no appeal process for requests made on the initiative of the State Director. (2) An area 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. (3) 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.” (4) 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.” (5) 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. Rural small business. Simple payback. (1) EEI projects simple payback = (total project costs) ÷ (dollar value of energy saved). (i) Energy saved will be determined by subtracting the projected energy (determined by the method in paragraph (1)(i)(B) of this definition) to be consumed from the historical energy consumed (determined by the method in paragraph (1)(i)(A) of this definition), and converting the result to a monetary value using a constant value or price of energy (determined by the method in paragraph (1)(i)(C) of this definition). (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. Attach utility bills to document applicant entity's historical energy consumption quantity. (B) Projected energy use if the proposed EEI project had been in place for the original building and/or equipment, as applicable, for the same time period used to determine that actual energy use under paragraph (1)(i)(A) of this definition. (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 under paragraph (1)(i)(A) of this definition. When calculating the actual average price of energy, only include energy charges directly reduced by the unit of energy being replaced or saved. Attach utility bills to document applicant entity's average price of energy. (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. (2) RES projects simple payback = (total project costs) ÷ (dollar value of energy units replaced, credited, sold, or used and fair market value of byproducts as applicable in a typical year). (i) Value of energy replaced will be calculated based on the applicant entity's historical energy consumption with actual average price paid for the energy replaced, following the methodology outlined in paragraph (1)(i) of this definition. Attach utility bills to document applicant entity's historical energy consumption quantity and actual average price of energy. (ii) Value of energy credited or sold will be calculated based on the amount of energy units to be credited or sold at the proposed rate per unit, as documented in utility net metering or crediting policies and/or a power purchase agreement. Attach utility net metering or crediting policies and/or a power purchase agreement to document energy quantity and proposed rate for energy credited or sold. (iii) If proposed energy will be used in a new facility, value of energy used will be calculated based on the amount of energy units to be used at the documented price per unit of conventional fuel alternative. Attach documentation of market price per unit of conventional fuel alternative. (iv) Value of byproducts produced by and used in the project or related enterprises should be documented at the fair market value to be received for the byproducts in a typical year. Attach documentation of market value price to be received for byproducts and documentation to support byproduct sales or direct use. (v) The RES projects simple payback 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. Small business (1) An entity or utility, as applicable, as further defined in subparagraphs (i) through (iv) and paragraph (2) of this definition. With the exception of the entities identified in this paragraph, all other non-profit entities are not small businesses for the purposes of REAP program eligibility: (i) A private for-profit entity, including a sole proprietorship, partnership, or corporation; (ii) A cooperative (including a cooperative qualified under section 501(c)(12) of the Internal Revenue Code); (iii) An electric utility (including a Tribal or governmental electric utility) that provides service to rural consumers and operates independent of direct government control; or (iv) A Tribal corporation or other Tribal business entities that are chartered under Section 17 of the Indian Reorganization Act (25 U.S.C. 477) or have similar structures and relationships with their Tribal governments and are acceptable to the Agency. The Agency will determine the small business status of such Tribal entity without regard to the resources of the Tribal government; and (2) An entity that meets Small Business Administration size standards in accordance with 13 CFR part 121 and criteria of § 121.301 as applicable to financial assistance programs, including (i) or (ii) below. The size of the concern alone and the size of the concern combined with other entity(ies) it controls or entity(ies) it is controlled by, must not exceed the size standard thresholds designated for the industry in which the concern alone or the concern and its controlling entity(ies), whichever is higher, is primarily engaged. (i) The concern's tangible net worth is not in excess of $15 million and average net income (excluding carry-over losses) for the preceding two completed fiscal years is not in excess of $5.0 million; or (ii) The size of the concern does not exceed the Small Business Administration (SBA) size standard thresholds designated for the industry in which it is primarily engaged, as measured by number of employees or annual receipts. Industry size standard designations to be utilized are listed in the Small Business Administration's (SBA) table of size standards found in 13 CFR part 121.201. Number of employees and annuals receipts are calculated as follows: (A) Number of employees is calculated as the average number of all individuals employed by a concern on a full-time, part-time, or other basis, based upon numbers of employees for each of the pay periods for the preceding completed 12 calendar months. If a concern has not been in business for 12 months, the average number of employees is used for each of the pay periods during which it has been in business. (B) Annual receipts are calculated as average total income plus cost of goods sold for the for the five most recent years. If a concern has been in operation for less than 60 months, average annual receipts for as long as the concern has been in operation are used. Smart Utility. State. Steady state operating level Total eligible project costs. Total project costs. Underserved community(ies). Used equipment. Useful life Veteran. [86 FR 22309, Apr. 27, 2021, as amended at 87 FR 38644, June 29, 2022] § 4280.104 Exception authority. The Administrator may, on a case-by-case basis, grant an exception to any requirement or provision of this subpart provided that such an exception is in the best financial interests of the Federal Government. Exercise of this authority cannot be in conflict with applicable law. § 4280.105 Review or appeal rights. Agency Applicants or grantees may have appeal or review rights for Agency decisions made under this part. Agency decisions that are adverse to the individual participant are appealable, while matters of general applicability are not subject to appeal; however, such decisions are reviewable for appealability by the National Appeals Division (NAD). All appeals will be conducted by NAD and will be handled in accordance with 7 CFR part 11. The applicant or grantee can appeal any Agency decision that directly and adversely affects them. § 4280.106 Conflict of interest. (a) General. (b) Assistance to employees, relatives, and associates. (c) Member/delegate clause. § 4280.107 [Reserved] § 4280.108 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., 42 U.S.C. 2000d et seq., (1) Initial compliance reviews will be conducted by the Agency prior to funds being obligated for programs. (2) When compliance reviews are applicable to the grant, one subsequent compliance review following project completion is required. This will occur after the last disbursement of grant funds has been made. (d) Environmental analysis. (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 or Tribal Historic Preservation Offices 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. (e) Discrimination complaints Who may file. (2) Time for filing. § 4280.109 Ineligible applicants, grantees, and owners. Applicants, grantees, and owners will be ineligible to receive funds under this subpart as discussed in paragraphs (a) and (b) of this section. (a) If an applicant, grantee, or owner has an outstanding judgment obtained by the U.S. in a Federal Court (other than in the United States Tax Court), is delinquent in the payment of Federal income taxes, or is delinquent on a Federal debt, the applicant, grantee, or owner is not eligible to receive a grant or combined grant and guaranteed loan until the judgment is paid in full or otherwise satisfied or the delinquency is resolved. (b) If an applicant, grantee, or owner is debarred from receiving Federal assistance, the applicant, grantee, or owner is not eligible to receive a grant or combined grant and guaranteed loan under this subpart. § 4280.110 General applicant, application, and funding provisions. (a) Satisfactory progress. (b) Application submittal. Federal Register (1) Grant applications. (2) Combined grant and guaranteed loan applications. (c) Application limits. (d) Application modification. (e) Incomplete applications. (f) Application withdrawal. (g) Technical report. Federal Register (1) Technical report format and detail. (i) Allow the Agency to determine the technical merit of the applicant's project under § 4280.117; (ii) Allow the calculation of simple payback as defined in § 4280.103; (iii) For RES Projects, enable the calculation of the percentage of historical use of energy compared to the amount of renewable energy that will be generated once the project is operating at its steady state operating level. If the project is closely associated with a residence, demonstration must be made that 50 percent or more of the projected renewable energy will benefit the agricultural operation or rural small business; and (iv) Demonstrate that the RES or EEI will operate or perform over the project's useful life in a reliable, safe, and a cost-effective manner, which may include but is not limited to addressing project design, installation, operation, maintenance, and warranties. (2) Technical report modifications. (3) Hybrid projects. (h) Time limit on use of grant funds. (1) Time extensions. (2) Return of funds to the Agency. § 4280.111 Notifications. (a) Eligibility. (b) Ineligibility. (c) Funding determinations. Renewable Energy System and Energy Efficiency Improvement Grants § 4280.112 Applicant eligibility. To receive a RES or EEI grant under this subpart, an applicant must meet the requirements specified in paragraphs (a) through (g) of this section. (a) Type of applicant. (b) Ownership and control. (1) Own the project; and (2) Own or control the site for the project. If the grantee does not maintain ownership of the project and ownership or control of the site, then grant funds may be recovered from the grantee by the Agency in accordance with Departmental Regulations. (c) End Users. (d) Revenues and expenses. (e) Legal authority and responsibility. (f) Unique Entity Identifier (UEI). (g) System for Awards Management (SAM). (1) Be registered in the SAM prior to submitting an application; (2) Maintain an active SAM registration with current information at all times while an application is pending and until final fund disbursement has been made. § 4280.113 Project eligibility. For a project to be eligible to receive a RES or EEI grant under this subpart, the proposed project must meet each of the requirements specified in paragraphs (a) through (e) of this section. Subsequent EEI projects must meet the requirements specified in paragraph (a)(5)(ii) of this section. The applicant is cautioned against taking any actions or incurring any obligations prior to the Agency completing the environmental review that would either limit the range of alternatives to be considered or that would have an adverse effect on the environment, such as the initiation of construction. If the applicant takes any such actions or incurs any such obligations, it could result in project ineligibility. (a) The project must be for: (1) The purchase of a new RES; (2) The purchase of a refurbished RES; (3) The retrofitting of an existing RES; (4) For the purposes of this subpart, only those hydroelectric sources with a rated power of 30 megawatts or less are eligible, or (5) Making an EEI that will allow less energy to be used on an annual basis than the original building and/or equipment being improved or replaced as provided in a vendor/installer certification or as demonstrated in an energy assessment or energy audit as applicable. (i) Types of improvements. (A) Efficiency improvements to existing RES; and (B) Construction of a new energy efficient building only when the building is used for the same purpose as the existing building, and, based on an energy assessment or energy audit, as applicable, it will be more cost effective to construct a new building and will use less energy on annual basis than improving the existing building. (ii) Subsequent EEI projects. (A) If the proposed EEI project would replace the same specific EEI equipment that had previously received funds under this subpart prior to the end of the useful life, as specified in the Financial Assistance Agreement, then the proposed improvement project, even if it is more energy efficient than the previously funded improvement, is ineligible. (B) If the proposed EEI project would replace the same specific EEI equipment that had previously received funds under this subpart at or after the end of the useful life, as specified in the Financial Assistance Agreement, then the proposed improvement is eligible for funding under this subpart provided the EEI is more energy efficient than the previously funded improvement. If the proposed EEI is not more energy efficient than the previously funded improvement, then it is not eligible for funding under this subpart. (b) The project must utilize commercially available technology; (c) The project must have technical merit, as determined using the procedures specified in § 4280.117; and (d) The project must be located in a rural area in a State if the type of applicant is a rural small business, or in a rural or non-rural area in a State if the type of applicant is an agricultural producer and the application supports the production, processing, vertical integration, or marketing of agricultural products. If the agricultural producer's operation is in a non-rural area, then the application can only be for RES or EEI components of the business operation that are directly related to and their use and purpose is limited to the agricultural production operation, such as vertically integrated operations, and are part of and co-located with the agricultural production operation. (e) For a RES project, where a residence is closely associated with and shares an energy metering device with an agricultural operation or rural small business to be served by the RES project, 50 percent or more of the energy to be generated by the RES project must be used by the agricultural operation or rural small business. This also includes projects which will virtually net meter or credit energy to be generated by the RES project to a residence off-site from the project and owned by the applicant. The application must contain sufficient documentation to evaluate this provision which may include using either of the methods identified in paragraphs (e)(1) through (2) of this section. (1) Provide a renewable energy site assessment or other documentation including calculations that demonstrate, based on historical energy use, that 50 percent or more of the energy to be produced by the RES project will be used in the agricultural operation or rural small business. This includes documentation on historical residential energy use. The Agency may request additional data to determine residential versus business or agricultural operation usage. The actual percentage of energy determined to benefit the rural small business or agricultural operation will be used to determine eligible project costs; or (2) The applicant may install, or elect to conditionalize funding upon the installation of, a device (such as a second meter) that restricts 100 percent of the energy generated by the RES project to be used only by the agricultural operation or rural small business. (f) An applicant is permitted to use up to 10 percent of the amount provided under this subpart to construct, improve, or acquire broadband infrastructure, subject to the requirements of 7 CFR 1980, Subpart M, Special Authority to Enable Funding of Broadband and Smart Utility Facilities Across Select Rural Development Programs. § 4280.114 Ineligible projects. The Agency will not award funding under this part for any projects identified in this section, unless otherwise noted. (a) Research and development projects and projects that involve technology that is not commercially available; (b) Business operations that derive more than 10 percent of annual gross revenue from gambling activity. Gambling activities include any lease income from space or machines used for gambling activities. State or Tribal-authorized lottery proceeds, as approved by the Agency, conducted for the purpose of raising funds for the approved project are excluded; (c) Business operations deriving income from activities of a sexual nature or illegal activities; (d) Residential RES or EEI projects, including farm labor housing, apartment complexes, and owner-occupied bed and breakfasts, except for-profit nursing homes and assisted living facilities that provide full-time medical care for residents, and for-profit hotels that provide short-term housing; (e) Racetracks or facilities for conducting either professional or amateur races of animals, or by professional or amateur drivers or jockeys, or any other type of racing; (f) RES projects that co-fire with fossil fuels, natural gas or petroleum-based products or materials such as coal and other non-renewable fuels, oils, and chemicals, and tires or plastic; (g) Projects where 50 percent or more of the costs are ineligible or where project costs as defined in the application do not meet the definition of a renewable energy system or energy efficiency improvement, including projects submitted for labor costs only. Project costs associated with an EEI that are not clearly identified in the energy assessment or audit will be considered ineligible costs; and (h) Projects proposing two or more different types of RES technologies that are not incorporated into a unified system and projects proposing two or more different types of RES technologies at two or more locations. § 4280.115 RES and EEI grant funding. (a) Grant amounts. (1) Minimum request. Federal Register (2) Maximum request. Federal Register (3) Maximum grant assistance. Federal Register (b) Matching funds and other funds. (1) Without specific statutory authority, other Federal grant funds cannot be used to meet the matching funds requirement. A copy of the statutory authority must be provided to the Agency to verify if the other Federal grant funds can be used to meet the matching funds requirement under this subpart. (2) Passive third-party equity contributions are acceptable for RES projects, including equity raised from the sale of Federal tax credits. (c) Eligible Project Costs. (1) Purchase and installation of new or refurbished equipment. (2) Construction, retrofitting, replacement, and improvements. (3) EEI identified by vendor/installer certification or in the applicable energy assessment or energy audit. (4) Fees for construction permits and licenses and fees required by an interconnection agreement. (5) Professional service fees related to the project for qualified consultants, contractors, installers, and other third-party services. (6) For an eligible RES in which a residence is closely associated with the rural small business or agricultural operation the installation of a second meter to separate the residence from the portion of the project that benefits the rural small business or agricultural operation, as applicable. (d) Ineligible project costs. (1) Costs for agricultural tillage equipment, used equipment, and vehicles; (2) Construction or equipment costs that would be incurred regardless of the installation of a RES or EEI. (3) Lease payments, including lease to own or capitalized leases; (4) Any project cost that creates a conflict of interest or an appearance of a conflict of interest as provided in § 4280.106; (5) Funds used for political or lobbying activities; and (6) Funds used to pay off any Federal direct or guaranteed loans or other Federal debts. (e) Award amount considerations. (1) The type of RES to be purchased; (2) The estimated quantity of energy to be generated by the RES; (3) The expected environmental benefits of the RES; (4) The quantity of energy savings expected to be derived from the activity, as certified by the vendor/installer as applicable, or demonstrated by an energy audit or energy assessment; (5) The estimated period of time for the energy savings generated by the activity to equal the cost of the activity; and (6) The expected energy efficiency of the RES. § 4280.116 Grant applications—general. (a) General. (b) Application content. (c) Evaluation of applications. (1) The application is complete, as defined in § 4280.103; (2) The Applicant is eligible according to § 4280.112; (3) The project is eligible according to § 4280.113; and (4) The proposed project has technical merit as determined under § 4280.117. § 4280.117 Determination of technical merit. The Agency will determine the technical merit of all proposed projects for which complete applications are submitted under §§ 4280.118, 4280.119, and 4280.120 under this subpart using the procedures specified in this section. Only projects that have been determined by the Agency to have technical merit are eligible for funding under this subpart. (a) General. (b) Technical report areas. (1) EEI whose total project costs are $80,000 or less. (i) Project description; (ii) Qualifications of EEI provider(s); and (iii) Vender/Installer certification, energy assessment, or energy audit. (2) RES whose total project costs are $80,000 or less. (i) Project description; (ii) Resource assessment; (iii) Project economic assessment; and (iv) Qualifications of key service providers. (3) EEI whose total project costs are greater than $80,000. (i) Project information; (ii) Energy assessment or energy audit; and (iii) Qualifications of the contractor or installers. (4) RES whose total project costs are less than $200,000, but more than $80,000. (i) Project description; (ii) Resource assessment; (iii) Project economic assessment; (iv) Project construction and equipment; and (v) Qualifications of key service providers. (5) RES whose total project costs are $200,000 and greater. (i) Qualifications of the project team; (ii) Agreements and permits; (iii) Resource assessment; (iv) Design and engineering; (v) Project development; (vi) Equipment procurement and installation; and (vii) Operations and maintenance. (c) Pass/Pass with conditions/fail assignments. (d) Determination. (1) A project whose technical report receives a “pass” in each of the applicable technical report areas will be considered to have “technical merit.” (2) A project whose technical report receives a “pass with conditions” in one or more the applicable areas will be considered to have “conditional technical merit.” (3) A project whose technical report receives a “fail” in any one technical report area will be considered to be without technical merit. (e) Further processing of applications. § 4280.118 Grant applications for RES and EEI projects with total project costs of $200,000 and greater. Grant applications for RES and EEI projects with total project costs of $200,000 and greater must provide the information specified in paragraphs (a) through (c) of this section, as applicable. Each applicant is encouraged, but is not required, to self-score the project using the evaluation criteria in § 4280.121. (a) Forms and certifications. (1) Form RD 4280-3C, “Application for Renewable Energy Systems and Energy Efficiency Improvement Projects Total Project Costs of $200,000 or Greater”. (2) Form SF-424, “Application for Federal Assistance.” (3) Form SF-424C, “Budget Information—Construction Programs.” (4) Form SF-424D, “Assurances—Construction Programs.” (5) Identify the ethnicity, race, and gender of the applicant. Identify if the borrower is a veteran. This information is optional and is not required for a complete application but may be used by the Agency to award priority points. (6) Environmental documentation in accordance with 7 CFR part 1970. The applicant should contact the Agency to determine what documentation is required to be provided. (7) The applicant must identify whether or not the applicant has a known relationship or association with an Agency employee. If there is a known relationship, the applicant must identify each Agency employee with whom the applicant has a known relationship. (8) Certification that the applicant is a legal entity in good standing (as applicable) and operating in accordance with the laws of the State(s) or Tribe(s) where the applicant has a place of business. (9) Certification by the applicant that the equipment required for the project is available, can be procured and delivered within the proposed project development schedule, and will be installed in conformance with manufacturer's specifications and design requirements. This would not be applicable when equipment is not part of the project. (10) Certification by the applicant that the project will be constructed in accordance with applicable laws, regulations, agreements, permits, codes, and standards. (b) Applicant information. (1) Type of applicant. (2) Applicant description. (i) Describe how the applicant meets the ownership and control requirements as identified in § 4280.112(b). (ii) For each entity(ies) it controls or entity(ies) it is controlled by, provide a list of the individual owners with their contact information. Describe the relationship between the applicant and the other entity(ies), including percent ownership and control, management, passive investor ownership, and as applicable products exchanged. Organizational charts to demonstrate structure should be submitted when applicable. (3) Financial information. (i) All financial information ( e.g., (ii) For sole proprietorships and other situations where business assets are held personally, financial statements must be prepared using only the assets and liabilities directly attributable to the business. Assets, plus any improvements must be valued at the lower of cost or market value. (iii) The Agency may request additional financial statements, financial models, cash flow information, updated financial statements, and other related financial information to determine the financial feasibility of a Project. Required financial statements: (A) Historical financial statements. (B) Current balance sheet and income statement. (C) Pro forma financial statements. (4) Previous grants and loans. (c) Project information. (1) Identification as to whether the project is for a RES or an EEI project. Include a description and the location of the project. (2) A description of the process that will be used to conduct all procurement transactions to demonstrate compliance with § 4280.125(a)(1). (3) Indicate if the proposed project will have a positive effect on resource conservation ( e.g., e.g., e.g., (4) Identify the amount of funds and the source(s) the applicant is proposing to use for the project. Provide written commitments for funds at the time the application is submitted to receive points under this scoring criterion. (i) If financial resources come from the applicant, documentation may include bank statements that demonstrates availability of funds. (ii) If a third party is providing financial assistance, the applicant must submit a commitment letter signed by an authorized official of the third party. The letter must be specific to the project and must identify the dollar amount and any applicable rates and terms. If the third-party commitment is a loan, the commitment must be firm; a letter-of-intent or pre-qualification letter subject to underwriting requirements or contingencies are not acceptable. An acceptable condition may be based on the receipt of the REAP grant or an appraisal. (d) Technical report. (e) Construction planning and performing development. § 4280.119 Grant applications for RES and EEI projects with total project costs of less than $200,000, but more than $80,000. Grant applications for RES and EEI projects with total project costs of less than $200,000, but more than $80,000, may provide the information specified in this section or, if the applicant elects to do so, the information specified in § 4280.118. In order to submit an application under this section, the criteria specified in paragraph (a) of this section must be met. The content for applications submitted under this section is specified in paragraph (b) of this section. Unless otherwise specified in this subpart, the construction planning and performing development procedures and the payment process that will be used for awards for applications submitted under this section are specified in paragraphs (c) and (d), respectively, of this section. (a) Criteria for submitting applications for projects with total project costs of less than $200,000, but more than $80,000. (1) The applicant must be eligible in accordance with § 4280.112. (2) The project must be eligible in accordance with § 4280.113. (3) Total project costs must be less than $200,000, but more than $80,000. (4) Construction planning and performing development must be performed in compliance with paragraph (c) of this section. The applicant or the applicant's prime contractor assumes all risks and responsibilities of project development. (5) The applicant or the applicant's prime contractor is responsible for all interim financing, including during construction. (6) The applicant agrees not to request reimbursement from funds obligated under this program until after project completion and is operating in accordance with the information provided in the application for the project. (7) The applicant must maintain insurance as required under § 4280.123(b), except business interruption insurance is not required. (b) Application content. (1) Forms and certifications. (2) Applicant information. (3) Project information. (4) Technical report. (c) Construction planning and performing development. (1) General. (2) Small acquisition and construction procedures. (3) Contractor forms. (i) Form RD 400-6, “Compliance Statement,” for contracts exceeding $10,000; and (ii) Form AD-1048, “Certification Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion—Lower Tier Covered Transactions,” for contracts exceeding $25,000. (d) Payment process for applications for RES and EEI projects with total project costs of less than $200,000, but more than $80,000. (1) Upon completion of the project, the grantee must submit to the Agency a copy of the contractor's certification of final completion for the project and a statement that the grantee accepts the work completed. At its discretion, the Agency may require the applicant to have an inspector certify that the project is constructed and installed correctly. (2) The RES or EEI project must be constructed, installed, and operating as described in the technical report prior to disbursement of funds. For RES, the system must be operating at the steady state operating level described in the technical report for a period of not less than 30 days, unless this requirement is modified by the Agency, prior to disbursement of funds. Any modification to the 30-day steady state operating level requirement will be based on the Agency's review of the technical report and will be incorporated into the Letter of Conditions. (3) Prior to making payment, the Agency will be provided with Form RD 1924-9, “Certificate of Contractor's Release,” and Form RD 1924-10, “Release by Claimants,” or similar forms, executed by all persons who furnished materials or labor in connection with the contract. § 4280.120 Grant applications for RES and EEI projects with total project costs of $80,000 or less. Grant applications for RES and EEI projects with total project costs of $80,000 or less must provide the information specified in this section or, if the applicant elects to do so, the information specified in either §§ 4280.118 or 4280.119. In order to submit an application under this section, the criteria specified in paragraph (a) of this section must be met. The content for applications submitted under this section is specified in paragraph (b) of this section. Unless otherwise specified in this subpart, the construction planning and performing development procedures and the payment process that will be used for awards for applications submitted under this section are specified in paragraphs (c) and (d), respectively, of this section. (a) Criteria for submitting applications for RES and EEI projects with total project costs of $80,000 or less. (1) The applicant must be eligible in accordance with § 4280.112. (2) The project must be eligible in accordance with § 4280.113. (3) Total project costs must be $80,000 or less. (4) Construction planning and performing development must be performed in compliance with paragraph (c) of this section. The applicant or the applicant's prime contractor assumes all risks and responsibilities of project development. (5) The applicant or the applicant's prime contractor is responsible for all interim financing, including during construction. (6) The applicant agrees not to request reimbursement from funds obligated under this program until after the project has been completed and is operating in accordance with the information provided in the application for the project. (7) The applicant must maintain insurance as required under § 4280.123(b), except business interruption insurance is not required. (b) Application content. (1) Forms and certifications. (i) Form RD 4280-3A, “Application for Renewable Energy Systems and Energy Efficiency Improvement Projects Total Project Costs of $80,000 or Less”. (ii) Form SF-424, “Application for Federal Assistance”. (iii) Form SF-424C, “Budget Information for Construction Programs”. (iv) Form SF-424D, “Assurances for Construction Programs”. (v) Identify the ethnicity, race, and gender of the applicant. Identify if the borrower is a veteran. This information is optional and is not required for a complete application but may be used by the Agency to award priority points. (vi) Environmental documentation in accordance with 7 CFR part 1970. The applicant should contact the Agency to determine what documentation is required to be provided. (vii) Certification by the applicant that: (A) The applicant meets each of the applicant eligibility criteria found in § 4280.112. The Agency reserves the right to request supporting documentation to verify applicant eligibility; (B) The proposed project meets each of the project eligibility requirements found in § 4280.113; (C) The design, engineering, testing, and monitoring will be sufficient to demonstrate that the proposed project will meet its intended purpose; (D) The equipment required for the project is available, can be procured and delivered within the proposed project development schedule, and will be installed in conformance with manufacturer's specifications and design requirements. This would not be applicable when equipment is not part of the project; (E) The project will be constructed in accordance with applicable laws, regulations, agreements, permits, codes, and standards; (F) The applicant meets the criteria for submitting an application for projects with total project costs of $80,000 or less; (G) The applicant will abide by the open and free competition requirements in compliance with § 4280.125(a)(1); and (H) For bioenergy projects, any and all woody biomass feedstock from National Forest System land or public lands cannot be otherwise used as a higher value wood-based product. (viii) State whether the applicant has received any grants and/or guaranteed loans under this subpart, or any guaranteed loans under 7 CFR part 5001. If the applicant has, identify each such grant and/or loan and describe the progress the applicant has made on each project for which the grant and/or loan was received, including projected schedules and actual completion dates. (ix) The applicant must identify whether or not the applicant has a known relationship or association with an Agency employee. If there is a known relationship, the applicant must identify each Agency employee with whom the applicant has a known relationship. (x) The applicant is a legal entity in good standing (as applicable) and operating in accordance with the laws of the State(s) or Tribe where the applicant has a place of business. (2) General. (i) Identify whether the project is for a RES or an EEI project; (ii) Identify the primary NAICS code applicable to the applicant's operation if known or a description of the operation in enough detail for the Agency to determine the primary NAICS code; (iii) Indicate if the proposed project will have a positive effect on resource conservation ( e.g., e.g., e.g., (iv) Identify the amount of matching funds and other funds and the source(s) the applicant is proposing to use for the project. In order to receive points under this scoring criterion, written commitments for funds ( e.g., (A) If financial resources come from the applicant, documentation may include a bank statement that demonstrates availability of funds. (B) If a third party is providing financial assistance, the applicant must submit a commitment letter signed by an authorized official of the third party. The letter must be specific to the project, identify the dollar amount and any applicable rates and terms. If the third-party commitment is a loan, the commitment must be firm, a letter-of-intent or pre-qualification letter, subject to underwriting requirements or contingencies are not acceptable. An acceptable condition may be based on the receipt of the REAP grant or an appraisal. (3) Technical report for EEI. (i) Project description. (ii) Qualifications of EEI provider(s). (A) They are qualified to complete the project as intended, including the number of years of experience with the proposed EEI technology. Any contractor or installer with less than 2 years of experience may be required to provide additional information in order for the Agency to determine if they are a qualified installer/contractor. (B) The EEI system will operate and perform over the project's useful life in a reliable and cost-effective manner; and (iii) Energy assessment. (iv) Simple payback. (4) Technical report for RES. (i) Project description. (ii) Resource assessment. (iii) Project economic assessment. (iv) Qualifications of key service providers. (A) They are qualified to complete the project as intended, including the number of similar systems installed previously and any professional credentials, licenses, and relevant experience. If specific numbers are not available for similar systems, you may submit an estimation of the number of similar systems; and (B) The RES system will operate and perform over the project's useful life in a reliable and cost-effective manner. (c) Construction planning and performing development for applications submitted under this section. (1) General. (2) Small acquisition and construction procedures. (3) Contractor forms. (i) Form RD 400-6, “Compliance Statement” for contracts exceeding $10,000; and (ii) Form AD-1048, “Certification Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion lower Tier Covered Transactions” for contracts exceeding $25,000. (d) Payment process for applications for RES and EEI projects with total project costs of $80,000 or less. (2) The RES or EEI project must be constructed, installed, and currently be operating as described in the technical report prior to disbursement of funds. For RES, the system must be operating at the steady state operating level described in the technical report for a period of not less than 30 days, unless this requirement is modified by the Agency, prior to disbursement of funds. Any modification to the 30-day steady state operating level requirement will be based on the Agency's review of the technical report and will be incorporated into the Letter of Conditions. (3) Prior to making payment, the grantee must provide the Agency with Form RD 1924-9 and Form RD 1924-10, or similar forms, executed by all persons who furnished materials or labor in connection with the contract. § 4280.121 Scoring RES and EEI grant applications. Agency personnel will score each complete and eligible RES and EEI application based on the scoring criteria specified in this section, unless otherwise specified in a Federal Register (a) Environmental benefits. e.g., e.g., e.g., (1) Any one of the three impact areas, 1 point will be awarded. (2) Any two of the three impact areas, 3 points will be awarded. (3) All three impact areas, 5 points will be awarded. (b) Energy generated, replaced, or saved. (1) Quantity of energy generated or saved per REAP grant dollar requested. (i) RES. (A) 50,000 BTUs average annual energy generated or replaced per grant dollar requested or higher, 10 points will be awarded; or (B) Less than 50,000 BTUs annual energy generated or replaced per grant dollar requested, points will be awarded according to the results of taking the energy generated or replaced per grant dollar requested/50,000 × 10 points. The points awarded are rounded to the nearest hundredth of a point. (ii) EEI. (A) 50,000 BTUs average annual energy saved per grant dollar requested or higher, 10 points will be awarded; or (B) Less than 50,000 BTUs average annual energy saved per grant dollar requested, points will be awarded according to the result of taking the energy saved per grant dollar requested/50,000 × 10 points. The points awarded are rounded to the nearest hundredth of a point. (2) Quantity of energy replaced, generated, or saved. (i) Energy replacement. (A) Documentation for energy replacement. (B) Calculation. (C) Awarding of points. ( 1 ( 2 ( 3 (ii) Energy generation. (iii) Energy saved. (A) 50 percent or greater, 15 points will be awarded; (B) 35 percent up to, but not including 50 percent, 10 points will be awarded; (C) 20 percent up to, but not including 35 percent, 5 points will be awarded; or (D) Less than 20 percent, no points will be awarded. (c) Commitment of funds. (1) Calculation. (2) Awarding of points. (i) If the percentage of written commitments is 100 percent of the matching funds, 15 points will be awarded. (ii) If the percentage of written commitments is less than 100 percent, but more than 50 percent, points will be awarded as follows: ((Percentage of written commitments −50 percent)/(50 percent)) × 15 points, where points awarded are rounded to the nearest hundredth of a point. (iii) If the percentage of written commitments is 50 percent or less, no points will be awarded. (d) Previous grantees and borrowers. (1) If the applicant has never received and accepted a grant award or a guaranteed loan commitment under either this part or 7 CFR part 5001 of this title, 15 points will be awarded. (2) If the applicant has not received and accepted a grant award or guaranteed loan commitment under this subpart, or a guaranteed loan commitment under 7 CFR part 5001 of this title within the 2 previous Federal fiscal years, 5 points will be awarded. (3) If the applicant has received a grant award or guaranteed loan commitment under this subpart, or a guaranteed loan commitment under 7 CFR part 5001 of this title within the 2 previous Federal fiscal years, no points will be awarded. (e) Existing business. (f) Simple payback. (1) RES. (i) Less than 10 years, 15 points will be awarded; (ii) 10 years up to but not including 15 years, 10 points will be awarded; (iii) 15 years up to and including 25 years, 5 points will be awarded; or (iv) Longer than 25 years, no points will be awarded. (2) EEI. (i) Less than 4 years, 15 points will be awarded; (ii) 4 years up to but not including 8 years, 10 points will be awarded; (iii) 8 years up to and including 12 years, 5 points will be awarded; or (iv) Longer than 12 years, no points will be awarded. (g) Size of request. (h) State Director and Administrator priority points. (1) The application is for an under-represented technology. (2) Selecting the application helps achieve geographic diversity, which may include points based upon the size of the funding request. (3) The applicant is a member of an unserved or under-served population described as follows: (i) Owned by a veteran, including but not limited to individuals as sole proprietors, members, partners, stockholders, etc., of not less than 20 percent. In order to receive points, applicants must provide a statement in their applications to indicate that owners of the project have Veteran status. (ii) [Reserved] (4) Selecting the application helps further a Presidential initiative or a Secretary of Agriculture priority. (5) The proposed project is located in a Federally declared disaster area. Declarations must be within the last 2 calendar years. (6) The proposed project is located in an area where 20 percent or more of its population is living in poverty, as defined by the United States Census Bureau, underserved community(ies) or has experienced long-term population decline, or loss of employment. [86 FR 22309, Apr. 27, 2021, as amended at 90 FR 30560, July 10, 2025] § 4280.122 Selecting RES and EEI grant applications for award. Unless otherwise provided for in a Federal Register (a) RES and EEI grant applications. (1) To be competed in the State and National competitions, complete applications must be received by the applicable State Office by 4:30 p.m. local time no later than March 31. If March 31 falls on a non-business day or a federally-observed holiday, the next Federal business day will be considered the last day for receipt of a complete application. Complete applications received after this date and time will be processed in the subsequent fiscal year. (2) All eligible RES and EEI grant applications that remain unfunded after completion of the State competition will be competed in a National competition. (b) RES and EEI grant applications requesting $20,000 or less. (1) For complete RES and EEI grant applications for grants requesting $20,000 or less, there will be two State competitions each Federal fiscal year. Complete applications for $20,000 or less that are received by the Agency by 4:30 p.m. local time on October 31 of the Federal fiscal year will be competed against each other. Complete applications for $20,000 or less that are received by the Agency by 4:30 p.m. local time on March 31 of the Federal fiscal year and any applications for $20,000 or less that were not ready to compete or were not funded from the prior competition, will be competed against each other. If either October 31 or March 31 falls on a weekend or a federally observed holiday, the next Federal business day will be considered the last day for receipt of a complete application. Complete applications received after 4:30 p.m. local time on March 31, regardless of the postmark on the application, will be processed in the subsequent fiscal year. (2) All eligible RES and EEI grant applications requesting $20,000 or less that remain unfunded after completion of the State competition for applications received by March 31 will be competed in the National competition. (c) Ranking of applications. (d) Funding selected applications. (e) Handling of ranked applications not funded. (1) All complete and eligible applications requesting $20,000 or less may be competed in up to five competitions within a Federal fiscal year and if not selected for funding, the Agency will discontinue consideration of the applications. (2) The Agency will discontinue consideration for funding all complete and eligible applications requesting more than $20,000 that are not selected for funding after the State and National competitions for the Federal fiscal year. (f) Commencement of the project. § 4280.123 Awarding and administering RES and EEI grants. The Agency will award and administer RES and EEI grants in accordance with Departmental Regulations and with paragraphs (a) through (h) of this section. (a) Letter of Conditions. (b) Insurance requirements. (1) Property insurance, such as fire and extended coverage, will normally be maintained on all structures and equipment. (2) Liability. (3) National flood insurance is required in accordance with 7 CFR part 1806, subpart B, if applicable. (4) Business interruption insurance for projects with total project costs of more than $200,000. (c) Forms and certifications. (1) Form RD 1942-46, “Letter of Intent to Meet Conditions.” (2) Form RD 1940-1. (3) Form SF-LLL, “Disclosure of Lobbying Activities,” if the grant exceeds $100,000 and/or if the grantee has made or agreed to make payment using funds other than Federal appropriated funds to influence or attempt to influence a decision in connection with the application. (4) Form RD 400-4, “Assurance Agreement,” or successor form. (5) Form AD-1048, as signed by the contractor or other lower tier party. (d) Evidence of matching funds and other funds. i.e., i.e., (e) System for Award Management (SAM) registration. e.g. (f) Financial Assistance Agreement. (g) Grant approval. (h) Power purchase agreement. § 4280.124 Servicing RES and EEI grants. The Agency will service RES and EEI grants in accordance with the requirements specified in Departmental Regulations; 7 CFR part 3; 7 CFR 1951 Subparts E and O; the Financial Assistance Agreement; and paragraphs (a) through (k) of this section. (a) Inspections. (b) Programmatic changes. (1) Prior approval. (i) Grantees must submit requests for programmatic changes in writing to the Agency for Agency approval. (ii) Failure to obtain prior Agency approval of any such change could result in such remedies as suspension, termination, and recovery of grant funds. (iii) Prior Agency approval is required for all increases in project costs. Prior Agency approval is required for a decrease in project cost only if the decrease would have a negative effect on the long-term viability of the project. A decrease in project cost that does not have a negative impact on long-term viability requires Agency review and approval prior to disbursement of funds. (2) Changes in project cost or scope. (3) Change of contractor or vendor. (c) Transfer of ownership. (1) The entity is determined by the Agency to be an eligible entity under this subpart; and (2) The type of RES or EEI technology and the scope of the project for which the Agency funds will be used remain unchanged. (d) Disposition of acquired property. (e) Financial management system and records. (1) Financial management system. (i) Accurate, current, and complete disclosure of the financial results of each grant; (ii) Records that identify adequately the source and application of funds for grant-supporting activities, together with documentation to support the records. Those records must contain information pertaining to grant awards and authorizations, obligations, unobligated balances, assets, liabilities, outlays, and income; and (iii) Effective control over and accountability for all funds. The grantee must adequately safeguard all such assets and must ensure that funds are used solely for authorized purposes. (2) Records. (f) Audit requirements. (g) Grant disbursement. (1) Unless authorized by the Agency to do so, grantees may submit requests for reimbursement no more frequently than monthly. Ordinarily, payment will be made within 30 days after receipt of a proper request for reimbursement. (2) Grantees must not request reimbursement for the Federal share of amounts withheld from contractors to ensure satisfactory completion of work until after it makes those payments. (3) Payments will be made by electronic funds transfer. (4) Grantees must use SF-271, “Outlay Report and Request for Reimbursement for Construction Programs,” or other format prescribed by the Agency to request grant reimbursements. Fund requests must at a minimum include documentation of costs and evidence of payment(s), including payment date(s). Failure to provide sufficient documentation of costs and evidence of payment, including payment date, may result in denied reimbursement. (5) For a grant awarded to a project with total project costs of $200,000 and greater, grant funds will be disbursed in full after the project is completed, is operational, and has met or exceeded the steady state operating level as set out in the grant award requirements. Grant funds may also be disbursed through 90 percent of grant disbursement. The final 10 percent of grant funds will be held by the Agency until construction of the project is completed, the project is operational, and the project has met or exceeded the steady state operating level as set out in the grant award requirements. In addition, the Agency reserves the right to request additional information or testing if upon a final site visit or review of documentation, the 30-day steady state operating level is not found acceptable to the Agency. (h) Monitoring of project. (1) Grantees shall constantly monitor performance to ensure that: (i) Time schedules are being met; (ii) Projected work is being accomplished by projected time periods; (iii) Financial resources are being appropriately expended by contractors (if applicable); and (iv) Any other performance objectives identified in the scope of work are being achieved. (2) To the extent that resources are available, the Agency will monitor grantees to ensure that activities are performed in accordance with the Agency-approved scope of work and to ensure that funds are expended for approved purposes. The Agency's monitoring of grantees neither: (i) Relieves the grantee of its responsibilities to ensure that activities are performed within the scope of work approved by the Agency and that funds are expended for approved purposes only; nor (ii) Provides recourse or a defense to the grantee should the grantee conduct unapproved activities, engage in unethical conduct, engage in activities that are or that give the appearance of a conflict of interest, or expend funds for unapproved purposes. (i) Reporting requirements. (1) Federal financial reports. i.e., (2) Project performance reports. i.e., (i) Semiannual project performance reports. (A) A comparison of actual accomplishments to the objectives for that period; (B) Reasons why established objectives were not met, if applicable; (C) Reasons for any problems, delays, or adverse conditions which will affect attainment of overall program objectives, prevent meeting time schedules or objectives, or preclude the attainment of particular objectives during established time periods. This disclosure must be accompanied by a statement of the action taken or planned to resolve the situation; and (D) Objectives and timetables established for the next reporting period. (ii) Final project development report. (A) A detailed project funding and expense summary; and (B) A summary of the project's installation/construction process, including recommendations for development of similar projects by future Applicants to the program. (3) Project completion requirements. (i) RES. (ii) EEI. (j) Grant close-out. § 4280.125 Construction planning and performing development. (a) General. (1) Maximum open and free competition. (2) Equal employment opportunity. (3) Surety. (i) Surety covering both performance and payment will be required. The United States, acting through the Agency, will be named as co-obligee on all surety unless prohibited by State or Tribal law. Surety may be provided as specified in paragraphs (a)(3)(i)(A) or (B) of this section. (A) Surety in the amount of 100 percent of the contract cost may be provided using either: ( 1 ( 2 (B) Cash deposit in escrow of at least 50 percent of the contract amount. The cash deposit cannot be from funds awarded under this subpart. (ii) The surety will normally be in the form of performance bonds and payment bonds; however, when other methods of surety are necessary, bid documents must contain provisions for such alternative types of surety. The use of surety other than performance bonds and payment bonds requires concurrence by the Agency after submission of a justification to the Agency together with the proposed form of escrow agreement or letter of credit. (iii) When surety is not provided, contractors must furnish evidence of payment in full for all materials, labor, and any other items procured under the contract in an Agency-approved form. (iv) The Agency may make exceptions to surety for any of the situations identified in paragraphs (a)(3)(iv)(A) through (E) of this section. (A) Small acquisition and construction procedures as specified in § 4280.119(c) and (d) or § 4280.120(c) and (d) as applicable are used. (B) The proposed project is for equipment purchase and installation only and the contract costs for the equipment purchase and installation are $200,000 or less. (C) The proposed project is for equipment purchase and installation only and the contract costs for the equipment purchase and installation are more than $200,000 and the following requirements can be met: ( 1 ( 2 (D) Other construction projects that have only one contractor performing work. (E) The grantee agrees to request reimbursement of grant funds only after the contractors have furnished evidence of payment in full and evidence there are no outstanding liens regarding any materials, labor, and any other items procured under the contract, and the systems are deemed operational. (4) Grantees accomplishing work. (i) A clear understanding of the division of work must be established and delineated in the contract; (ii) Grantees are not eligible for payment for their own work as it is not an eligible project cost; (iii) Warranty requirements applicable to the technology must cover the grantee's work; and (iv) Inspection and acceptance of the grantee's work must be completed by either: (A) An inspector that will: ( 1 ( 2 (B) A licensed engineer that will: ( 1 ( 2 ( 3 (b) Forms used. (c) Technical services. (1) The design, installation monitoring, testing prior to commercial operation, and project completion certification be completed by a licensed professional engineer (PE) or team of licensed PEs. Licensed PEs may be “in-house” PEs or contracted PEs. (2) Any contract for design services must be subject to Agency concurrence. (3) Engineers must be licensed in the State where the project is to be constructed. (4) The Agency may grant an exception to the requirements of paragraphs (c)(1) through (3) of this section if the following requirements are met: (i) State or Tribal law does not require the use of a licensed PE; and (ii) The project is not complex, as determined by the Agency, and can be completed to meet the requirements of this program without the services of a licensed PE. (d) Design policies. (1) Environmental requirements. (2) Architectural barriers. et seq. et seq. et seq. (3) Energy/environment. (4) Seismic safety. et seq. (e) Contract methods. (1) Traditional method or design-bid-build. (i) Solicitation of offers. (A) Incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. The description must not, in competitive procurements, contain features that unduly restrict competition. The description may include a statement of the qualitative nature of the material, product or service to be procured, and when necessary will set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use. When it is impractical or uneconomical to make a clear and accurate description of the technical requirements, a “brand name or equal” description may be used to define the performance or other salient requirements of a procurement. The specific features of the named brands which must be met by offerors must be clearly stated. (B) Clearly specify all requirements which offerors must fulfill and all other factors to be used in evaluating bids or proposals. (ii) Contract pricing. (iii) Unacceptable bidders. (A) An engineer or architect as a person who has prepared plans and specifications or who will be responsible for monitoring the construction; (B) Any entity in which the grantee's architect or engineer is an officer, employee, or holds or controls a substantial interest in the grantee; (C) The grantee's governing body officers, employees, or agents; (D) Any member of the grantee's immediate family or partners in paragraphs (e)(1)(iii)(A), (B), or (C) of this section; or (E) An entity which employs, or is about to employ, any person in paragraph (e)(1)(iii)(A), (B), (C), or (D) of this section. (iv) Contract award. (2) Design/build method. (i) Concurrence information. (A) The grantee's written request to use the design/build method with a description of the proposed method. (B) A proposed scope of work describing in clear, concise terms the technical requirements for the contract. It shall include a nontechnical statement summarizing the work to be performed by the contractor, the results expected, and a proposed construction schedule showing the sequence in which the work is to be performed. (C) A proposed firm-fixed-price contract for the entire project which provides that the contractor will be responsible for any extra cost which result from errors or omissions in the services provided under the contract, as well as compliance with all Federal, State, local, and Tribal requirements effective on the contract execution date. (D) Where noncompetitive negotiation is proposed and found, by the Agency, to be an acceptable procurement method, then the Agency will evaluate documents indicating the contractor's performance on previous similar projects in which the contractor acted in a similar capacity. (E) A detailed listing and cost estimate of equipment and supplies not included in the construction contract but which are necessary to properly operate the project. (F) Evidence that a qualified construction inspector who is independent of the contractor has or will be hired. (G) Preliminary plans and outline specifications. However, final plans and specifications must be completed and reviewed by the Agency prior to the start of construction. (H) The grantee's attorney's opinion and comments regarding the legal adequacy of the proposed contract documents and evidence that the grantee has the legal authority to enter into and fulfill the contract. (ii) Agency concurrence of design/build method. (iii) Forms used. (iv) Contract provisions. (A) The contract sum; (B) The dates for starting and completing the work; (C) The amount of liquidated damages, if any, to be charged; (D) The amount, method, and frequency of payment; (E) Surety provisions that meet the requirements of paragraph (a)(3) of this section; (F) The requirement that changes or additions must have prior written approval of the Agency as identified in the letter of conditions; (G) Contract review and concurrence. The grantee's attorney will review the executed contract documents, including performance and payment bonds, and will certify that they are in compliance with Federal, State, or Tribal law, and that the persons executing these documents have been properly authorized to do so. The contract documents, engineer's recommendation for award, and bid tabulation sheets will be forwarded to the Agency for concurrence prior to awarding the contract. All contracts will contain a provision that they are not effective until they have been concurred, in writing, by the Agency; (H) This part does not relieve the grantee of any responsibilities under its contract. The grantee is responsible for the settlement of all contractual and administrative issues arising out of procurement entered into in support of Agency funding. These include, but are not limited to, source evaluation, protests, disputes, and claims. Matters concerning violation of laws are to be referred to the applicable local, State, Tribal, or Federal authority; and (3) Construction management. (f) Procurement methods. (1) Competitive sealed bids. (i) At a sufficient time prior to the date set for opening of bids, bids must be solicited from an adequate number of qualified sources. In addition, the invitation must be publicly advertised. (ii) The invitation for bids, including specifications and pertinent attachments, must clearly define the items or services needed in order for the bidders to properly respond to the invitation under paragraph (f)(1) of this section. (iii) All bids must be opened publicly at the time and place stated in the invitation for bids. (iv) A firm-fixed-price contract award must be made by written notice to that responsible bidder whose bid, conforming to the invitation for bids, is lowest. When specified in the bidding documents, factors such as discounts and transportation costs will be considered in determining which bid is lowest. (v) The applicant, with the concurrence of the Agency, will consider the amount of the bids or proposals, and all conditions listed in the invitation. On the basis of these considerations, the applicant will select and notify the lowest responsible bidder. The contract will be awarded using an Agency-approved form. (vi) Any or all bids may be rejected by the grantee when it is in their best interest. (2) Competitive negotiation. (i) Proposals must be solicited from two qualified sources, unless otherwise approved by the Agency, to permit reasonable competition consistent with the nature and requirements of the procurement. (ii) The request for proposal must identify all significant evaluation factors, including price or cost where required, and their relative importance. (iii) The grantee must provide mechanisms for technical evaluation of the proposals received, determination of responsible offerors for the purpose of written or oral discussions, and selection for contract award. (iv) Award may be made to the responsible offeror whose proposal will be most advantageous to the grantee, price and other factors considered. Unsuccessful offerors must be promptly notified. (v) Owners may utilize competitive negotiation procedures for procurement of architectural/engineering and other professional services, whereby the offerors' qualifications are evaluated, and the most qualified offeror is selected, subject to negotiations of fair and reasonable compensation. (3) Noncompetitive negotiation. (i) After solicitation of a number of sources, competition is determined inadequate; or (ii) No acceptable bids have been received after formal advertising. (4) Additional procurement methods. (i) The contract sum; (ii) The dates for starting and completing the work; (iii) The amount of liquidated damages to be charged; (iv) The amount, method, and frequency of payment; (v) Whether or not surety bonds will be provided; and (vi) The requirement that changes or additions must have prior written approval of the Agency. (g) Contracts awarded prior to applications. (1) Modifications. (2) Consultant's certification. (3) Owner's certification. (h) Contract administration. §§ 4280.126-4280.136 [Reserved] Combined Funding for Renewable Energy Systems and Energy Efficiency Improvements § 4280.137 Combined grant and guaranteed loan funding requirements. The requirements for a RES or EEI project for which an applicant is seeking a combined grant and guaranteed loan are specified in this section. (a) Eligibility. (b) Funding. (1) The amount of any combined grant and guaranteed loan shall not exceed 75 percent of eligible project costs and the grant portion shall not exceed 25 percent of eligible project costs. Loan amount provisions of 7 CFR part 5001.406(d) apply, except for (d)(2). For purposes of combined funding requests, eligible project costs are based on the total costs associated with those items specified in § 4280.115(c) and 7 CFR part 5001.121(d), except for (d)(2). The applicant must provide the remaining total funds needed to complete the project. (2) The minimum guaranteed loan request allowed is $5,000, with the grant portion of the funding request being at least $1,500 for EEI projects and at least $2,500 for RES projects. (c) Loan origination provisions. (d) Application provisions and documentation. (1) Applications must include the following documentation, including the requisite forms and certifications, specified in §§ 4280.118, 4280.119, or 4280.120 as applicable, for the grant request, except that applicants submitting a properly completed 5001-1 form only need to submit the applicable RD 4280-3 form containing the applicant's CAGE code and properly signed certifications. The guaranteed loan applications are filed in accordance with 7 CFR part 5001.301 where they will be processed in accordance with 7 CFR parts 5001.303 and 5001.307, and as follows: (2) Where both the grant application and the guaranteed loan application provisions request the same documentation, form, or certification, such documentation, form, or certification may be submitted once; the combined application does not need to contain duplicate documentation, forms, and certifications. (e) Loan provisions. (f) Guarantee provisions. (g) Servicing provisions. (h) Evaluation, scoring, and award. Federal Register (i) Interest rate and terms of loan. (j) Other provisions. (1) All other provisions of §§ 4280.101 through 4280.111 apply to the grant portion of the combined funding request and all other provisions as applicable of 7 CFR parts 5001.1 through 5001.10 apply to the guaranteed loan portion of the combined funding request. (2) All other provisions of §§ 4280.112 through 4280.124 apply to the grant portion of the combined funding request and § 4280.125 applies if the project for which the grant is sought has a total project cost of $200,000 and greater. (3) All guarantee loan and grant combination applications that are ranked, but not funded, will be processed in accordance with provisions found in § 4280.122(d), (e), and (f). (4) Applicants whose combination applications are approved for funding must utilize both the loan and the grant. The guaranteed loan will be closed prior to grant funds being disbursed. The Agency reserves the right to reduce the total loan guarantee and grant award, as appropriate, if construction costs are less than projected or if funding sources differ from those provided in the application. (5) Ineligible project provisions of §§ 5001.115 and 5001.119, and ineligible use of funds provision of § 5001.122 apply to the guaranteed loan portion of the combined funding request. Borrower ineligibility provisions of § 5001.127 are also applicable. §§ 4280.138-4280.148 [Reserved] Energy Audit and Renewable Energy Development Assistance Grants § 4280.149 Applicant eligibility. To be eligible for an EA grant or a REDA grant under this subpart, the applicant must meet each of the criteria, as applicable, specified in paragraphs (a) through (d) of this section. The Agency will determine an applicant's eligibility. (a) The applicant must be one of the following: (1) A unit of State, Tribal, or local government; (2) A land-grant college or university, or other institution of higher education; (3) A rural electric cooperative; (4) A public power entity; (5) An instrumentality of a State, Tribal, or local government; or (6) A council, as defined under the Resource Conservation and Development Program, at 16 U.S. C. 3451. (b) The applicant must have sufficient capacity to perform the EA or REDA activities proposed in the application to ensure success. The Agency will make this assessment based on the information provided in the application. (c) The applicant must have the legal authority necessary to apply for and carry out the purpose of the grant. (d) The applicant must: (1) Be registered in the SAM prior to submitting an application; (2) Maintain an active SAM registration with current information at all times until final fund disbursement has been made. (3) Provide its UEI number in each application it submits to the Agency. Generally, the UEI number is included on SF-424. § 4280.150 Project eligibility. To be eligible for an EA or a REDA grant, the grant funds for a project must be used by the grantee to assist agricultural producers or rural small businesses in one of the purposes specified in paragraphs (a) and (b) of this section, and must also comply with paragraphs (c) through (f) of this section. (a) Conducting and promoting energy audits as defined in 4280.103. (b) Conducting and promoting REDA by providing to agricultural producers and rural small businesses recommendations and information on how to improve the energy efficiency of the operations and to use renewable energy technologies and resources in their operations. (c) EA and REDA can be provided only to a project located in a rural area unless the grantee of such project is an agricultural producer. If the project is owned by an agricultural producer, the project for which such services are being provided may be located in either a rural or non-rural area and the EA or REDA can only be for an EEI or RES on components that support the production, processing, vertical integration, or marketing of agricultural products. If the agricultural producer's operation is in a non-rural area, then the Energy Audit or REDA can only be for RES or EEI components of the business operation that are directly related to and their use and purpose is limited to the agricultural production operation, such as vertically integrated operations, and are part of and co-located with the agricultural production operation. (d) The EA or REDA must be provided to a recipient in a State. (e) The applicant must have a place of business in a State. (f) The applicant is cautioned against taking any actions or incurring any obligations prior to the Agency completing the environmental review that would either limit the range of alternatives to be considered or that would have an adverse effect on the environment, such as the initiation of construction. If the applicant takes any such actions or incurs any such obligations, it could result in project ineligibility. § 4280.151 Ineligible projects. Ineligible projects for EA and REDA grants include, but are not limited to: (a) Research related projects. (b) Feasibility studies of any nature. (c) Projects where funding is not targeted directly to assisting agricultural producers or rural small businesses. (d) Projects to develop computer software or programs. (e) Projects where 50 percent or more of the costs are in-eligible or where project costs as defined in the application do not meet the definition of providing energy audits or renewable energy development assistance. (f) Projects which propose to provide energy audits or renewable energy development assistant for residential purposes. § 4280.152 Grant funding for Energy Audit and Renewable Energy Development Assistance. (a) Maximum grant amount. (b) Eligible project costs. (1) Salaries; (2) Travel expenses; (3) Office supplies ( e.g., (4) Expenses charged as a direct cost or as an indirect cost of up to a maximum of 5 percent for administering the grant. (c) Ineligible project costs. (1) Payment for any construction-related activities; (2) Purchase or lease of equipment; (3) Payment of any judgment or debt owed to the United States; (4) Any goods or services provided by a person or entity who has a conflict of interest as provided in § 4280.106; (5) Any costs of preparing the application package for funding under this subpart; and (6) Funding of political or lobbying activities. (7) Funding to train individuals to become qualified to perform EA or REDA assistance. (8) Payment or waiver of student tuition. (d) EA. § 4280.153 EA and REDA grant applications—content. (a) Unless otherwise specified in a Federal Register (b) Applicants must submit complete applications consisting of the elements specified in paragraphs (b)(1) through (7) of this section, except that paragraph (b)(3), is optional. Applications will be evaluated based only on information submitted by the applicant in the application. (1) Form SF-424. (2) Form SF-424A, “Budget Information—Non Construction Programs.” (3) Identify the ethnicity, race, and gender of the applicant. This information is optional and is not required for a complete application. (4) Certification that the applicant is a legal entity in good standing (as applicable) and operating in accordance with the laws of the State(s) or Tribe where the applicant has a place of business. (5) The applicant must identify whether or not the applicant has a known relationship or association with an Agency employee. If there is a known relationship, the applicant must identify each Agency employee with whom the applicant has a known relationship. (6) A proposed scope of work to include the following items: (i) A brief summary including a project title describing the proposed project; (ii) Goals of the proposed project; (iii) Geographic scope or service area of the proposed project and the method and rationale used to select the service area; (iv) Identification of the specific needs for the service area and the target audience to be served. The number of agricultural producers and/or rural small businesses to be served must be identified including name and contact information, if available, as well as the method and rationale used to select the agricultural producers and/or rural small businesses; (v) Timeline describing the proposed tasks to be accomplished and the schedule for implementation of each task. Include whether organizational staff, consultants, or contractors will be used to perform each task. If a project is located in multiple States, resources must be sufficient to complete all projects; (vi) Marketing strategies to include a discussion on how the applicant will be marketing and providing outreach activities to the proposed service area ensuring that agricultural producers and/or rural small businesses are served; (vii) Applicant's experience as follows: (A) If applying for a REDA grant, the applicant's experience in completing similar REDA activities, such as renewable energy site assessments and renewable energy technical assistance provided directly to agricultural producers and rural small businesses, including the number of similar projects the applicant has performed and the number of years the applicant has been performing a similar service. (B) If applying for an EA grant, the number of energy audits the applicant has completed and the number of years the applicant has been performing those services; (C) For all applicants, the amount of experience in administering EA, REDA, or similar activities as applicable to the purpose of the proposed project. Provide discussion if the applicant has any existing programs that can demonstrate the achievement of energy savings or energy generation with the agricultural producers and/or rural small businesses the applicant has served. If the applicant has received one or more awards within the last 5 years in recognition of its renewable energy, energy savings, or energy-based technical assistance, please describe the achievement; (viii) Itemized budget; and (ix) Identify the amount of matching funds and other funds and the source(s) the applicant is proposing to use for the project. Provide written commitments for matching funds and other funds at the time the application is submitted. (A) If financial resources come from the applicant, documentation may include a bank statement that demonstrates availability of funds. (B) If a third party is providing financial assistance to the project, the applicant must submit a commitment letter signed by an authorized official of the third party. The letter must be specific to the project, identify the dollar amount being provided and any applicable rates and terms. § 4280.154 Evaluation of EA and REDA grant applications. The Agency will evaluate EA and REDA grant applications, based only upon information submitted in the application, to determine if: (a) The application is complete, as defined in § 4280.103 and as per § 4280.153; (b) The applicant is eligible according to § 4280.149; (c) The project is eligible according to § 4280.150 and 4280.151, including 50% or more of proposed project costs are eligible; and (d) Grant funding provisions according to § 4280.152 are met. § 4280.155 Scoring EA and REDA grant applications. The Agency will score each EA and REDA application using the criteria specified in paragraphs (a) through (f) of this section, with a maximum score of 100 points possible. Unless otherwise altered via a Federal Register (a) Geographic scope of project in relation to identified need. (1) If the applicant's proposed or existing service area is state-wide or includes all or parts of multiple states, and the scope of work has identified needs throughout that service area, 20 points will be awarded. (2) If the applicant's proposed or existing service area consists of multiple counties in a single state and the scope of work has identified needs throughout that service area, 15 points will be awarded. (3) If the applicant's service area consists of a single county or municipality and the scope of work has identified needs throughout that service area, 10 points will be awarded. (b) Number of agricultural producers/rural small businesses to be served. (1) If the applicant plans to provide EA or REDA to: (i) Up to 10 ultimate recipients, 2 points will be awarded. (ii) Between 11 and up to and including 25 ultimate recipients, 5 points will be awarded. (iii) More than 25 ultimate recipients, 10 points will be awarded. (2) If the applicant provides a list with at least 50 percent of the total number of proposed ultimate recipients ready to be assisted, including their name and contact information, an additional 10 points may be awarded. (c) Marketing and outreach plan. (1) The goals of the project; (2) Identified need; (3) Targeted ultimate recipients; (4) Timeline and action plan; and (5) Marketing and outreach strategies and supporting data for strategies. (d) Applicant's organizational experience in completing the EA or REDA proposed activity. e.g., (1) More than 10 years of experience, 25 points will be awarded. (2) At least 5 years and up to and including 10 years of experience, 20 points will be awarded. (3) At least 2 years and up to and including 5 years of experience, 10 points will be awarded. (4) Less than 2 years of experience, no points will be awarded. (e) Potential of project to produce energy savings or generation and its attending environmental benefits. (1) If the applicant (does not include entities the applicant will contract with) has an existing program that can demonstrate the achievement of energy savings or energy generation with the agricultural producers and/or rural small businesses it has served, 5 points will be awarded. (2) If the applicant (does not include entities the applicant will contract with) provides evidence that it has received one or more awards ( e.g., (i) International/national—3 points for each. (ii) Regional/State—2 points for each. (iii) Local—1 point for each. (f) Commitment of funds. (1) If the applicant proposes to match 50 percent or more of the grant funds requested, 20 points will be awarded. (2) If the applicant proposes to match 20 percent or more but less than 50 percent of the grant funds requested, 15 points will be awarded. (3) If the applicant proposes to match 5 percent or more but less than 20 percent of the grant funds requested, 10 points will be awarded. (4) If the applicant proposes to match less than 5 percent of the grant funds requested, no points will be awarded. § 4280.156 Selecting EA and REDA grant applications for award. Unless otherwise provided for in a Federal Register (a) Application competition. Federal Register (b) Ranking of applications. (c) Selection of applications for funding. (d) Handling of ranked applications not funded. § 4280.157 [Reserved] § 4280.158 Awarding and administering EA and REDA grants. The Agency will award and administer EA and REDA grants in accordance with Departmental Regulations and with the procedures and requirements specified in § 4280.123, except as specified in paragraphs (a) through (b) of this section. (a) Instead of complying with § 4280.123(b), the grantee must provide satisfactory evidence to the Agency that all officers of grantee organization authorized to receive and/or disburse Federal funds are covered by such bonding and/or insurance requirements as are normally required by the grantee. (b) The power purchase agreement specified in § 4280.123 (h) is not required. § 4280.159 Servicing EA and REDA grants. The Agency will service EA and REDA grants in accordance with the requirements specified in Departmental Regulations, the Financial Assistance Agreement, 7 CFR part 3, 7 CFR 1951 Subparts E and O, and the requirements in § 4280.124, except as specified in paragraphs (a) through (d) of this section. (a) Grant disbursement. (b) Semiannual performance reports. (1) A comparison of actual accomplishments to the objectives established for that period ( e.g., (2) A list of recipients, each recipient's location, and each recipient's NAICS code; (3) Problems, delays, or adverse conditions, if any, that have in the past or will in the future affect attainment of overall project objectives, prevent meeting time schedules or objectives, or preclude the attainment of particular project work elements during established time periods. This disclosure shall be accompanied by a statement of the action taken or planned to resolve the situation; (4) Objectives and timetable established for the next reporting period. (c) Final performance report. (1) For EA projects, the final performance report must provide complete information regarding: (i) The number of audits conducted, (ii) A list of recipients (agricultural producers and rural small businesses) with each recipient's NAICS code, (iii) The location of each recipient, (iv) The cost of each audit and documentation showing that the recipient of the EA provided 25 percent of the cost of the audit, and (v) The expected energy saved for each audit conducted if the audit is implemented. (2) For REDA projects, the final performance report must provide complete information regarding: (i) The number of recipients assisted, and the type of assistance provided, (ii) A list of recipients with each recipient's NAICS code, (iii) The location of each recipient, and (iv) The expected renewable energy that would be generated if the projects were implemented. (d) Outcome project performance report. §§ 4280.160-4280.165 [Reserved] § 4280.166 OMB control number. The report and recordkeeping requirements contained in this part have been approved by the Office of Management and Budget and have been assigned OMB control number 0570-0067 Appendix A to Subpart B of Part 4280—Technical Reports for Energy Efficiency Improvement (EEI) Projects For all EEI projects with total project costs of more than $80,000, provide the information specified in Sections A and D and in Section B or Section C, as applicable. If the application is for an EEI project with total project costs of $80,000 or less, please see § 4280.120 (b)(3) for the technical report information to be submitted with your application. If the application is for an EEI project with total project costs of $200,000 and greater, you must conduct an energy audit. However, if the application is for an EEI project with a total project costs of less than $200,000, you may conduct either an energy assessment or an energy audit. Section A—Project Information. Section B—Energy audit. (1) Situation report. (2) Potential improvement description. (i) Provide preliminary specifications for critical components. (ii) Provide preliminary drawings of project layout, including any related structural changes. (iii) Identify significant changes in future related operations and maintenance costs. (iv) Describe explicitly how outcomes will be measured. (3) Technical analysis. (i) For the most recent 12 months, or an average of 2, 3, 4, or 5 years, prior to the date the application is submitted, provide both the total amount and the total cost of energy used for the original building and/or equipment, as applicable, for each improvement identified in the potential project. In addition, provide for each improvement identified in the potential project an estimate of the total amount of energy that would have been used and the total cost that would have been incurred if the proposed project were in operation for this same time period. (ii) Calculate all direct and attendant indirect costs of each improvement; (iii) Rank potential improvements measures by cost-effectiveness; and (iv) Provide an estimate of Simple Payback, including all calculations, documentation, and any assumptions. (4) Qualifications of the auditor. Section C—Energy Assessment. (1) Situation report. (2) Potential improvement description. (3) Technical analysis. (i) For the most recent 12 months, or an average of 2, 3, 4, or 5 years, prior to the date the application is submitted, provide both the total amount and the total cost of energy used for the original building and/or equipment, as applicable, for each improvement identified in the potential project. In addition, provide for each improvement identified in the potential project an estimate of the total amount of energy that would have been used and the total cost that would have been incurred if the proposed project were in operation for this same time period. (ii) Document baseline data compared to projected consumption, together with any explanatory notes on source of the projected consumption data. When appropriate, show before-and-after data in terms of consumption per unit of production, time, or area. (iii) Provide an estimate of Simple Payback, including all calculations, documentation, and any assumptions. (4) Qualifications of the assessor. Section D—Qualifications. Appendix B to Subpart B of Part 4280—Technical Reports for Renewable Energy System (RES) Projects With Total Project Costs of Less Than $200,000, but More Than $80,000 Provide the information specified in Sections A through D for each technical report prepared under this appendix. A renewable energy site assessment may be used in lieu of Sections A through C if the renewable energy site assessment contains the information requested in Sections A through C. In such instances, the technical report would consist of Section D and the renewable energy site assessment. Note: If the total project cost for the RES project is $80,000 or less, this appendix does not apply. Instead, for such projects, please provide the information specified in § 4280.120 (b)(4). Section A—Project Description. Section B—Resource Assessment. If the application is for a bioenergy project, provide documentation that demonstrates that any and all woody biomass feedstock from National Forest System land or public lands cannot be used as a higher value wood-based product. Section C—Project Economic Assessment. Section D—Project Construction and Equipment Information. Section E—Qualifications of Key Service Providers. Appendix C to Subpart B of Part 4280—Technical Reports for Renewable Energy System (RES) Projects With Total Project Costs of $200,000 and Greater Provide the information specified in Sections A through G for each technical report prepared under this appendix. Provide the resource assessment under Section C that is applicable to the project. For hybrid projects, technical reports must be prepared for each technology that comprises the hybrid project. Section A—Qualifications of the Project Team. Section B—Agreements and Permits. Section C—Resource Assessment. 1. Wind. 2. Solar. 3. Bioenergy/Biomass Project. 4. Geothermal Electric Generation. 5. Geothermal Direct Generation. 6. Anaerobic Digester Project/Biogas. e.g., e.g., e.g., 7. Hydrogen Project. 8. Hydroelectric/Ocean Energy Projects. (9) RES with storage components. Section D—Design and Engineering. Section E—Project Development. Section F—Equipment Procurement and Installation. Section G—Operations and Maintenance. Appendix D to Subpart B of Part 4280—Feasibility Study Components Executive Summary Provide an overview to describe the nature and scope of the proposed project, including the purpose, project location, design features, capacity, and estimated capital costs. Include a summary of the feasibility determinations made for each applicable component. Economic What is it? Cost benefit analysis. What are the factors to consider? Minimum amount of inputs (labor, infrastructure, utilities, renewable resources, feedstocks) to operate successfully. Contracts in place and contracts to be negotiated, including terms and renewals. Environmental risks. Cost of project relative to the increase in revenues or benefits provided. Overall economic impact of project including new markets created and economic development. Market What is it? Analysis of the current and future market potential, competition, sales or service estimations including current and prospective buyers or users. What are the factors to consider? Competition. Type of project: Service, product or commodity based. Target market, new versus established. End user analysis, captive versus competitive. By-product revenue streams. Industry risk. Technical What is it? Analyzing the reliability of the technology to be used and/or the analysis of the delivery of goods or services, including transportation, business location, and the need for technology, materials, and labor. What are the factors to consider? Commercial availability. Product and process success record and duplication of results. Experience of the service providers. Roads, rail, airport infrastructure. Need for local transportation. Labor market. Availability of materials. Use, age, and reliability of technology. Construction risk. Financial What is it? Analysis of the operation to achieve sufficient income, credit, and cashflow to financially sustain the project over the long term and meet all debt obligations. What are the factors to consider? Commercial or project underwriting. Management's assumptions. Accounting policies. Source of repayment. Dependency on other entities. Equity contribution. Market demand forecast. Peer industry comparison. Cost-accounting system. Availability of short-term credit. Adequacy of raw materials and supplies. Sensitivity analysis. Management What is it? Analysis of the legal structure of the business or operation; ownership, board and management analysis. What are the factors to consider? History of the business or organization. Professional and educational background. Experience. Skills. Qualifications necessary to implement the project. Recommendation Conclude with an opinion and recommendation presented by the consultant. Qualifications Provide a resume or statement of qualifications of the author of the feasibility study, including prior experience. Subpart C [Reserved] 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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• 50 CFR Part 635 — Atlantic Highly Migratory Species#512150
• 50 CFR Part 648 — Fisheries of the Northeastern United States#512151
• 50 CFR Part 660 — Fisheries off West Coast States#512152