42 U.S.C. § 8814 : US Code - Section 8814: Loan guarantees

Search 42 U.S.C. § 8814 : US Code - Section 8814: Loan guarantees

(a) Authority of Secretary concerned
Subject to sections 8812 and 8817 of this title, the Secretary
concerned may commit to guarantee, and guarantee, against loss of
principal and interest, loans which are made to provide funds for
the construction of biomass energy projects.
(b) Estimated project construction costs as determinative of
initial and revised amount of guarantee
(1) Any guarantee of a loan under this section may not exceed 90
per centum of the cost of the construction of the biomass energy
project involved, as estimated by the Secretary on the date of the
guarantee or commitment to guarantee.
(2) In the event the construction costs of the project are
thereafter estimated by the Secretary concerned to exceed the
construction costs initially estimated by the Secretary, the
Secretary may in addition, upon application therefor, guarantee,
against loss of principal and interest, a loan for up to 60 per
centum of the difference between the construction costs then
estimated and the construction costs initially estimated.
(c) Debt obligation; ineligibility for purchase, etc., by Federal
Financing Bank or any Federal agency
Notwithstanding the provisions of the Federal Financing Bank Act
of 1973 (12 U.S.C. 2281 et seq.) or any other provision of law
(except as may be specifically provided by reference to this
subsection in any Act enacted after June 30, 1980), no debt
obligation which is guaranteed or committed to be guaranteed by the
Secretary of Agriculture or the Secretary of Energy under this
section shall be eligible for purchase by, or commitment to
purchase by, or sale or issuance to, the Federal Financing Bank or
any Federal agency.
(d) Terms and conditions
The terms and conditions of loan guarantees under this section
shall provide that, if the Secretary concerned makes a payment of
principal or interest upon the default by a borrower, the Secretary
shall be subrogated to the rights of the recipient of such payment
(and such subrogation shall be expressly set forth in the loan
guarantee or related agreements).
(e) Termination, cancellation, or revocation, and conclusive nature
of guarantee
Any loan guarantee under this section shall not be terminated,
canceled, or otherwise revoked, except in accordance with the terms
thereof and shall be conclusive evidence that such guarantee
complies fully with the provisions of this chapter and of the
approval and legality of the principal amount, interest rate, and
all other terms of the securities, obligations, or loans and of the
guarantee.
(f) Payment to lender
If the Secretary concerned determines that -
(1) the borrower is unable to meet payments and is not in
default,
(2) it is in the public interest to permit the borrower to
continue with such project, and
(3) the probable net benefit to the United States in paying the
principal and interest due under the loan will be greater than
that which would result in the event of a default,
then the Secretary may pay to the lender under a loan guarantee
agreement an amount not greater than the principal and interest
which the borrower is obligated to pay to such lender, if the
borrower agrees to reimburse the Secretary for such payment on
terms and conditions, including interest, which the Secretary
determines are sufficient to protect the financial interests of the
United States.
(g) Preconditions
(1) A loan may not be guaranteed under this section unless the
applicant for such loan has established to the satisfaction of the
Secretary concerned that the lender is not willing without such a
guarantee to extend credit to the applicant at reasonable rates and
terms, taking into consideration prevailing rates and terms for
loans for similar purposes and periods of time, to finance the
construction of the biomass energy project for which such loan is
sought.
(2) The Secretary concerned shall ensure that the lender bears a
reasonable degree of risk in the financing of such project.