7 U.S.C. § 940c : US Code - Section 940C: Cushion of credit payments program

Search 7 U.S.C. § 940c : US Code - Section 940C: Cushion of credit payments program

(a) Establishment
(1) In general
The Secretary shall develop and promote a program to encourage
borrowers to voluntarily make deposits into cushion of credit
accounts established within the Rural Electrification and
Telephone Revolving Fund.
(2) Interest
Amounts in each cushion of credit account shall accrue interest
to the borrower at a rate of 5 percent per annum.
(3) Balance
A borrower may reduce the balance of its cushion of credit
account only if the amount obtained from the reduction is used to
make scheduled payments on loans made or guaranteed under this
chapter.
(b) Uses of cushion of credit payments
(1) In general
(A) Cash balance
Cushion of credit payments shall be held in the Rural
Electrification and Telephone Revolving Fund as a cash balance
in the cushion of credit accounts of borrowers.
(B) Interest
All cash balance amounts (obtained from cushion of credit
payments, loan payments, and other sources) held by the Fund
shall bear interest to the Fund at a rate equal to the weighted
average rate on outstanding certificates of beneficial
ownership issued by the Fund.
(C) Credits
The amount of interest accrued on the cash balances shall be
credited to the Fund as an offsetting reduction to the amount
of interest paid by the Fund on its certificates of beneficial
ownership.
(2) Rural economic development subaccount
(A) Maintenance of account
The Secretary shall maintain a subaccount within the Rural
Electrification and Telephone Revolving Fund to which shall be
credited, on a monthly basis, a sum determined by multiplying
the outstanding cushion of credit payments made after October
1, 1987, by the difference (converted to a monthly basis)
between the average weighted interest rate paid on outstanding
certificates of beneficial ownership issued by the Fund and the
5 percent rate of interest provided to borrowers on cushion of
credit payments.
(B) Grants
The Secretary is authorized, from the interest differential
sums credited this subaccount and from any other funds made
available thereto, to provide grants or zero interest loans to
borrowers under this chapter for the purpose of promoting rural
economic development and job creation projects, including
funding for project feasibility studies, start-up costs,
incubator projects, and other reasonable expenses for the
purpose of fostering rural development.
(C) Repayments
In the case of zero interest loans, the Secretary shall
establish such reasonable repayment terms as will ensure
borrower participation.
(D) Proceeds
All proceeds from the repayment of such loans shall be
returned to the subaccount.
(E) Number of grants
Such loans and grants shall be made during each fiscal year
to the full extent of the amounts held by the rural economic
development subaccount, subject only to limitations as may be
from time-to-time imposed by law.