7 U.S.C. § 935 : US Code - Section 935: Insured loans; interest rates and lending levels

Search 7 U.S.C. § 935 : US Code - Section 935: Insured loans; interest rates and lending levels

(a) In general
The Secretary is authorized to make insured loans under this
subchapter and at the interest rates hereinafter provided to the
full extent of the assets available in the fund, subject only to
limitations as to amounts authorized for loans and advances as may
be from time to time imposed by the Congress of the United States
for loans to be made in any one year, which amounts shall remain
available until expended: Provided, That the Congress in the annual
appropriation Act may also authorize the transfer of any excess
cash in the fund for deposit into the Treasury as miscellaneous
receipts: And provided further, That any such loans and advances
shall not be included in the totals of the budget of the United
States Government and shall be exempt from any general limitation
imposed by statute on expenditures and net lending (budget outlays)
of the United States.
(b) Insured loans
Loans made under this section shall be insured by the Secretary
when purchased by a lender. As used in this chapter, an insured
loan is one which is made, held, and serviced by the Secretary, and
sold and insured by the Secretary hereunder; such loans shall be
sold and insured by the Secretary without undue delay.
(c) Insured electric loans
(1) Hardship loans
(A) In general
The Secretary shall make insured electric loans, to the
extent of qualifying applications for the loans, at an interest
rate of 5 percent per year to any applicant for a loan who
meets each of the following requirements:
(i) The average revenue per kilowatt-hour sold by the
applicant is not less than 120 percent of the average revenue
per kilowatt-hour sold by all utilities in the State in which
the applicant provides service.
(ii) The average residential revenue per kilowatt-hour sold
by the applicant is not less than 120 percent of the average
residential revenue per kilowatt-hour sold by all utilities
in the State in which the applicant provides service.
(iii) The average per capita income of the residents
receiving electric service from the applicant is less than
the average per capita income of the residents of the State
in which the applicant provides service, or the median
household income of the households receiving electric service
from the applicant is less than the median household income
of the households in the State.
(B) Severe hardship loans
In addition to hardship loans that are made under
subparagraph (A), the Secretary may make an insured electric
loan at an interest rate of 5 percent per year to an applicant
for a loan if, in the sole discretion of the Secretary, the
applicant has experienced a severe hardship.
(C) Limitation
Except as provided in subparagraph (D), the Secretary may not
make a loan under this paragraph to an applicant for the
purpose of furnishing or improving electric service to a
consumer located in an urban area (as defined by the Bureau of
the Census) if the average number of consumers per mile of line
of the total electric system of the applicant exceeds 17.
(D) Extremely high rates
In addition to hardship loans that are made under
subparagraphs (A) and (B), the Secretary shall make insured
electric loans, to the extent of qualifying applications for
the loans, at an interest rate of 5 percent per year to any
applicant for a loan whose residential revenue exceeds 15.0
cents per kilowatt-hour sold. A qualifying application from
such an applicant for the purpose of furnishing or improving
electric service to a consumer located outside of an urbanized
area shall not be subject to the conditions or limitation of
subparagraph (A) or (C).
(2) Municipal rate loans
(A) In general
The Secretary shall make insured electric loans, to the
extent of qualifying applications for the loans, at the
interest rate described in subparagraph (B) for the term or
terms selected by the applicant pursuant to subparagraph (C).
(B) Interest rate
(i) In general
Subject to clause (ii), the interest rate described in this
subparagraph on a loan to a qualifying applicant shall be - 
(I) the interest rate determined by the Secretary to be
equal to the current market yield on outstanding municipal
obligations with remaining periods to maturity similar to
the term selected by the applicant pursuant to subparagraph
(C), but not greater than the rate determined under section
1927(a)(3)(A) of this title that is based on the current
market yield on outstanding municipal obligations; plus
(II) if the applicant for the loan makes an election
pursuant to subparagraph (D) to include in the loan
agreement the right of the applicant to prepay the loan, a
rate equal to the amount by which - 
(aa) the interest rate on commercial loans for a
similar period that afford the borrower such a right;
exceeds
(bb) the interest rate on commercial loans for the
period that do not afford the borrower such a right.
(ii) Maximum rate
The interest rate described in this subparagraph on a loan
to an applicant for the loan shall not exceed 7 percent if - 
(I) the average number of consumers per mile of line of
the total electric system of the applicant is less than
5.50; or
(II)(aa) the average revenue per kilowatt-hour sold by
the applicant is more than the average revenue per kilowatt-
hour sold by all utilities in the State in which the
applicant provides service; and
(bb) the average per capita income of the residents
receiving electric service from the applicant is less than
the average per capita income of the residents of the State
in which the applicant provides service, or the median
household income of the households receiving electric
service from the applicant is less than the median
household income of the households in the State.
(iii) Exception
Clause (ii) shall not apply to a loan to be made to an
applicant for the purpose of furnishing or improving electric
service to consumers located in an urban area (as defined by
the Bureau of the Census) if the average number of consumers
per mile of line of the total electric system of the
applicant exceeds 17.
(C) Loan term
(i) In general
Subject to clause (ii), the applicant for a loan under this
paragraph may select the term for which an interest rate
shall be determined pursuant to subparagraph (B), and, at the
end of the term (and any succeeding term selected by the
applicant under this subparagraph), may renew the loan for
another term selected by the applicant.
(ii) Maximum term
(I) Applicant
The applicant may not select a term that ends more than
35 years after the beginning of the first term the
applicant selects under clause (i).
(II) Secretary
The Secretary may prohibit an applicant from selecting a
term that would result in the total term of the loan being
greater than the expected useful life of the assets being
financed.
(D) Call provision
The Secretary shall offer any applicant for a loan under this
paragraph the option to include in the loan agreement the right
of the applicant to prepay the loan on terms consistent with
similar provisions of commercial loans.
(3) Other source of credit not required in certain cases
The Secretary may not require any applicant for a loan made
under this subsection who is eligible for a loan under paragraph
(1) to obtain a loan from another source as a condition of
approving the application for the loan or advancing any amount
under the loan.
(d) Insured telephone loans
(1) Hardship loans
(A) In general
The Secretary shall make insured telephone loans, to the
extent of qualifying applications for the loans, at an interest
rate of 5 percent per year, to any applicant who meets each of
the following requirements:
(i) The average number of subscribers per mile of line in
the service area of the applicant is not more than 4.
(ii) The applicant is capable of producing net income or
margins before interest of not less than 100 percent (but not
more than 300 percent) of the interest requirements on all of
the outstanding and proposed loans of the applicant.
(iii) The Secretary has approved a telecommunications
modernization plan for the State under paragraph (3) and, if
the plan was developed by telephone borrowers under this
subchapter, the applicant is a participant in the plan.
(iv) The average number of subscribers per mile of line in
the area included in the proposed loan is not more than 17.
(B) Authority to waive tier requirement
The Secretary may waive the requirement of subparagraph
(A)(ii) in any case in which the Secretary determines (and sets
forth the reasons for the waiver in writing) that the
requirement would prevent emergency restoration of the
telephone system of the applicant or result in severe hardship
to the applicant.
(C) Effect of lack of funds
On request of any applicant who is eligible for a loan under
this paragraph for which funds are not available, the applicant
shall be considered to have applied for a loan under subchapter
IV of this chapter.
(2) Cost-of-money loans
(A) In general
The Secretary may make insured telephone loans for the
acquisition, purchase, and installation of telephone lines,
systems, and facilities (other than buildings used primarily
for administrative purposes, vehicles not used primarily in
construction, and customer premise equipment) related to the
furnishing, improvement, or extension of rural
telecommunications service, at an interest rate equal to the
then current cost of money to the Government of the United
States for loans of similar maturity, but not more than 7
percent per year, to any applicant for a loan who meets the
following requirements:
(i) The average number of subscribers per mile of line in
the service area of the applicant is not more than 15, or the
applicant is capable of producing net income or margins
before interest of not less than 100 percent (but not more
than 500 percent) of the interest requirements on all of the
outstanding and proposed loans of the applicant.
(ii) The Secretary has approved a telecommunications
modernization plan for the State under paragraph (3) and, if
the plan was developed by telephone borrowers under this
subchapter, the applicant is a participant in the plan.
(B) Concurrent loan authority
On request of any applicant for a loan under this paragraph
during any fiscal year, the Secretary shall - 
(i) consider the application to be for a loan under this
paragraph and a loan under section 948 of this title; and
(ii) if the applicant is eligible for a loan, make a loan
to the applicant under this paragraph in an amount equal to
the amount that bears the same ratio to the total amount of
loans for which the applicant is eligible under this
paragraph and under section 948 of this title, as the amount
made available for loans under this paragraph for the fiscal
year bears to the total amount made available for loans under
this paragraph and under section 948 of this title for the
fiscal year.
(C) Effect of lack of funds
On request of any applicant who is eligible for a loan under
this paragraph for which funds are not available, the applicant
shall be considered to have applied for a loan guarantee under
section 936 of this title.
(3) State telecommunications modernization plans
(A) Approval
If, not later than 1 year after final regulations are
promulgated to carry out this paragraph, any State, either by
statute or through the public utility commission of the State,
develops a telecommunications modernization plan that meets the
requirements of subparagraph (B), the Secretary shall approve
the plan for the State. If a State does not develop a plan in
accordance with the requirements of the preceding sentence, the
Secretary shall approve any telecommunications modernization
plan for the State that meets the requirements that is
developed by a majority of the borrowers of telephone loans
made under this subchapter who are located in the State.
(B) Requirements
For purposes of subparagraph (A), a telecommunications
modernization plan must, at a minimum, meet the following
objectives:
(i) The plan must provide for the elimination of party line
service.
(ii) The plan must provide for the availability of
telecommunications services for improved business,
educational, and medical services.
(iii) The plan must encourage and improve computer networks
and information highways for subscribers in rural areas.
(iv) The plan must provide for - 
(I) subscribers in rural areas to be able to receive
through telephone lines - 
(aa) conference calling;
(bb) video images; and
(cc) data at a rate of at least 1,000,000 bits of
information per second; and
(II) the proper routing of information to subscribers.
(v) The plan must provide for uniform deployment schedules
to ensure that advanced services are deployed at the same
time in rural and nonrural areas.
(vi) The plan must provide for such additional requirements
for service standards as may be required by the Secretary.
(C) Finality of approval
A telecommunications modernization plan approved under
subparagraph (A) may not subsequently be disapproved.
Notwithstanding paragraphs (1)(A)(iii) and (2)(A)(iii),(!1) and
section 948(b)(4)(C) (!2) of this title, the Secretary and the
Governor of the telephone bank may make a loan to a borrower
serving a State that does not have a telecommunication
modernization plan approved by the Secretary if the loan is
made less than 1 year after the Secretary has adopted final
regulations implementing this paragraph.