PART 705—COMMUNITY DEVELOPMENT REVOLVING LOAN FUND ACCESS FOR CREDIT UNIONS Authority: 12 U.S.C. 1756, 1757(5)(D), and (7)(I), 1766, 1782, 1784, 1785 and 1786. Source: 76 FR 67587, Nov. 2, 2011, unless otherwise noted. Editorial Note: Nomenclature changes to part 705 appear at 84 FR 1607, Feb. 5, 2019. § 705.1 Authority, purpose, and scope. (a) This part 705 is issued by the National Credit Union Administration (NCUA) under section 130 of the Federal Credit Union Act, 12 U.S.C. 1772c-1, which implements the Community Development Credit Union Revolving Loan Fund Transfer Act (Pub. L. 99-609, 100 Stat. 3475 (Nov. 6, 1986)). (b) This part describes how NCUA makes money available to credit unions from its Community Development Revolving Loan Fund (Fund). NCUA administers the Fund and makes both loans and technical assistance grants to credit unions in accordance with the eligibility criteria and other qualifications, subject to the terms and conditions set out in this part. All loans and technical assistance grants made under this part are subject to funds availability and NCUA's discretion. (c) NCUA's policy is to revolve the loan funds to credit unions as often as practical in order to achieve maximum economic impact on as many credit unions as possible. (d) The financial awards provided to credit unions through the Fund will better enable them to support the communities in which they operate; provide basic financial services to low-income residents of these communities, and result in more opportunities for the residents of those communities to improve their financial circumstances. (e) The Fund is intended to support the efforts of credit unions through loans and technical assistance grants needed for: (1) Providing basic financial and related services to residents in their communities; (2) Enhancing their capacity to better serve their members and the communities in which they operate; and (3) Responding to emergencies. [76 FR 67587, Nov. 2, 2011, as amended at 81 FR 85112, Nov. 25, 2016] § 705.2 Definitions. For purposes of this part, the following terms shall have the meanings assigned to them in this section. Application Loan Low-income Members Notice of Funding Opportunity Participating Credit Union Program Qualifying Credit Union Technical Assistance Grant [81 FR 85112, Nov. 25, 2016, as amended at 85 FR 62212, Oct. 2, 2020] § 705.3 Eligibility requirements. To be eligible to receive a CDRLF award, in the form of either a loan or a technical assistance grant, a Qualifying Credit Union must, within the timeframes specified in any Notice of Funding Opportunity: (a) Complete and submit an Application; and (b) Meet the underwriting standards established by NCUA, including those pertaining to financial viability, as set forth in the Application and any related materials developed by NCUA. § 705.4 Permissible uses of loan funds. NCUA may make loans from the Fund to Participating Credit Unions for various uses. The following is a non-exhaustive list of permissible uses or projects: (a) Development of new products or services for members, including new or expanded share draft or credit card programs; (b) Partnership arrangements with community-based service organizations or government agencies; (c) Loan programs, including, but not limited to, microbusiness loans, payday loan alternatives, education loans, and real estate loans; (d) Acquisition, expansion, or improvement of office space or equipment, including branch facilities, ATMs, and electronic banking facilities; and (e) Operational programs such as security or disaster recovery. § 705.5 Terms and conditions for loans. (a) NCUA may make loans, in such amounts and subject to such terms and conditions as it may determine, from the Fund to Participating Credit Unions. (b) Funding Limits. (c) Recording of a loan. (d) Interest rate. (e) Repayment and maturity. (2) Interest payments will be required semiannually beginning six months after the initial distribution of a loan. (3) NCUA may allow flexible repayment of loan principal. Details and specific provisions will be addressed in the Notice of Funding Opportunity and other program materials. (f) Acceleration. (g) Matching requirements. (1) Loan monies made available generally must be matched by the Participating Credit Union in an amount equal to the loan amount. Any loan monies matched by nonmember share deposits are not subject to the 20% limitation on nonmember deposits under § 701.32 of this chapter. Participating Credit Unions must maintain the increase in the total amount of share deposits for the duration of the loan. Once the loan is repaid, nonmember share deposits accepted to meet the matching requirement are subject to § 701.32 of this chapter. (2) Upon approval of its loan application, and before it meets its matching, if required, a Participating Credit Union may receive the entire loan commitment in a single payment. If, at NCUA's discretion, any funds are withheld, the remainder of the funds committed will be available to the Participating Credit Union only after it has documented that it has met the match requirement. (3) Failure of a Participating Credit Union to generate the required match within the time specified in the loan documents may result in the reduction of the loan proportionate to the amount of match actually generated. Payment of any additional funds initially approved may be limited as appropriate to reflect the revised amount of the loan approved. Any funds already advanced to the Participating Credit Union in excess of the revised amount of loan approval must be repaid immediately to NCUA. Failure to repay such funds to NCUA upon demand may result in the default of the entire loan. (h) Other terms and conditions. [76 FR 67587, Nov. 2, 2011, as amended at 81 FR 85112, Nov. 25, 2016; 82 FR 60292, Dec. 20, 2017] § 705.6 Terms and conditions for technical assistance grants. (a) Participating Credit Unions must comply with the terms and conditions for technical assistance grants specified for each funding opportunity offered under a Notice of Funding Opportunity. (b) NCUA will establish applicable funding limits for technical assistance grants in the Notice of Funding Opportunity. [81 FR 85112, Nov. 25, 2016] § 705.7 Application and award processes. (a) Notice of Funding Opportunity. Federal Register (b) Application requirements. (1) Applications to participate and qualify for a loan or technical assistance grant under the Program may be obtained from the National Credit Union Administration as outlined in the related Notice of Funding Opportunity. (2) With respect to loans, NCUA will also require a Qualifying Credit Union to develop and submit a narrative describing how the Qualifying Credit Union intends to use the money obtained from the Fund to enhance the products or services it provides to its membership and how those enhanced products or services support the membership and community served by the Qualifying Credit Union. (3) In addition to those items required in this section, a Qualifying Credit Union that is a non-federally insured credit union must also include the following: (i) A copy of its most recent external audit report; (ii) Proof of deposit and surety bond insurance which states the maximum insurance levels permitted by the policies; (iii) A balance sheet, an income and expense statement, and a schedule of delinquent loans, for each of the four most recent quarter-ends; (iv) Documentation of the credit union's status as a low-income credit union by the appropriate state supervisory agency consistent with NCUA Rules and Regulations at §§ 701.34(a) and 741.204(b); and (v) An agreement to be subject to examination by NCUA. (c) Evaluation and selection of Qualifying Credit Unions. (1) Financial and Performance. (2) Compatibility. (3) Feasibility. (4) Examination Information and Applicable Concurrence. (i) NCUA will only provide a loan to a qualifying federal credit union with the concurrence of that credit union's supervising Regional Director; and (ii) NCUA will only provide a loan to a qualifying state-charted credit union with the written concurrence of the applicable Regional Director and the credit union's state supervisory authority. A qualifying state-chartered credit union should notify its state supervisory authority that it is applying for a loan from the Fund before submitting its application to NCUA. However, a qualifying state-chartered credit union is not required to obtain concurrence before applying for a loan. NCUA will obtain the concurrence directly from the state supervisory authority rather than through the qualifying state-chartered credit union. Additionally, before NCUA will provide a loan to a qualifying state-charted credit union the credit union must make copies of its state examination reports available to NCUA and agree to examination by NCUA. (d) Requests for additional information. (e) Timing. (f) Notice of Award. (g) Disbursement Loans. (2) Technical Assistance Grants. [76 FR 67587, Nov. 2, 2011. Redesignated and amended at 81 FR 85112, Nov. 25, 2016; 85 FR 62212, Oct. 2, 2020] § 705.8 Urgency. On an emergency basis, subject to funds availability, NCUA may consider a funding request from a Qualifying Credit Union experiencing an unplanned or unexpected expense that the Qualifying Credit Union is unable to meet with its own resources. The Qualifying Credit Union must demonstrate a compelling need for immediate assistance without which its continued operations would be threatened or severely disrupted. NCUA, in its discretion, will determine whether the situation constitutes an emergency and if the Qualifying Credit Union is required to submit any additional information to show why the funds are needed on an emergency basis. NCUA will determine and substantiate any reason to expedite funding in such case. Requests for loans or technical assistance grants under this section will be addressed on an ongoing basis and are outside the scope of the related Notice of Funding Opportunity. Technical assistance grants and loans provided on this basis must still demonstrate a purpose consistent with the goals of the Fund. Loans and technical assistance grants made under this section are not anticipated to be a regular source of funding for any Qualifying Credit Unions. [76 FR 67587, Nov. 2, 2011. Redesignated at 81 FR 85112, Nov. 25, 2016] § 705.9 Reporting and monitoring. (a) General. (b) Reporting Reporting to NCUA. (2) Reporting to Members Loans. (ii) Technical Assistance Grants. (c) Monitoring. [76 FR 67587, Nov. 2, 2011, as amended at 81 FR 85113, Nov. 25, 2016] § 705.10 Appeals. (a) Appeals of non-qualification. (1) Scope. (2) Appeals procedures inapplicable. (b) Appeals of technical assistance grant reimbursement denials. [81 FR 85113, Nov. 25, 2016, as amended at 82 FR 50293, Oct. 30, 2017]