7 U.S.C. § 940c-1 : US Code - Section 940C-1: Guarantees for bonds and notes issued for electrification or telephone purposes

Search 7 U.S.C. § 940c-1 : US Code - Section 940C-1: Guarantees for bonds and notes issued for electrification or telephone purposes

(a) In general
Subject to subsection (b) of this section, the Secretary shall
guarantee payments on bonds or notes issued by cooperative or other
lenders organized on a not-for-profit basis if the proceeds of the
bonds or notes are used to make loans for any electrification or
telephone purpose eligible for assistance under this chapter,
including section 904 or 922 of this title or to refinance bonds or
notes issued for such purposes.
(b) Limitations
(1) Outstanding loans
A lender shall not receive a guarantee under this section for a
bond or note if, at the time of the guarantee, the total
principal amount of such guaranteed bonds or notes outstanding of
the lender would exceed the principal amount of outstanding loans
of the lender for electrification or telephone purposes that have
been made concurrently with loans approved for such purposes
under this chapter.
(2) Generation of electricity
The Secretary shall not guarantee payment on a bond or note
issued by a lender, the proceeds of which are used for the
generation of electricity.
(3) Qualifications
The Secretary may deny the request of a lender for the
guarantee of a bond or note under this section if the Secretary
determines that - 
(A) the lender does not have appropriate expertise or
experience or is otherwise not qualified to make loans for
electrification or telephone purposes;
(B) the bond or note issued by the lender would not be
investment grade quality without a guarantee; or
(C) the lender has not provided to the Secretary a list of
loan amounts approved by the lender that the lender certifies
are for eligible purposes described in subsection (a) of this
section.
(4) Interest rate reduction
(A) In general
Except as provided in subparagraph (B), a lender may not use
any amount obtained from the reduction in funding costs as a
result of the guarantee of a bond or note under this section to
reduce the interest rate on a new or outstanding loan.
(B) Concurrent loans
A lender may use any amount described in subparagraph (A) to
reduce the interest rate on a loan if the loan is - 
(i) made by the lender for electrification or telephone
projects that are eligible for assistance under this chapter;
and
(ii) made concurrently with a loan approved by the
Secretary under this chapter for such a project, as provided
in section 937 of this title.
(c) Fees
(1) In general
A lender that receives a guarantee issued under this section on
a bond or note shall pay a fee to the Secretary.
(2) Amount
The amount of an annual fee paid for the guarantee of a bond or
note under this section shall be equal to 30 basis points of the
amount of the unpaid principal of the bond or note guaranteed
under this section.
(3) Payment
A lender shall pay the fees required under this subsection on a
semiannual basis.
(4) Rural economic development subaccount
Subject to subsection (e)(2) of this section, fees collected
under this subsection shall be - 
(A) deposited into the rural economic development subaccount
maintained under section 940c(b)(2)(A) of this title, to remain
available until expended; and
(B) used for the purposes described in section 940c(b)(2)(B)
of this title.
(d) Guarantees
(1) In general
A guarantee issued under this section shall - 
(A) be for the full amount of a bond or note, including the
amount of principal, interest, and call premiums;
(B) be fully assignable and transferable; and
(C) represent the full faith and credit of the United States.
(2) Limitation
To ensure that the Secretary has the resources necessary to
properly examine the proposed guarantees, the Secretary may limit
the number of guarantees issued under this section to 5 per year.
(3) Department opinion
On the timely request of a lender, the General Counsel of the
Department of Agriculture shall provide the Secretary with an
opinion regarding the validity and authority of a guarantee
issued to the lender under this section.
(e) Authorization of appropriations
(1) In general
There are authorized to be appropriated such sums as are
necessary to carry out this section.
(2) Fees
To the extent that the amount of funds appropriated for a
fiscal year under paragraph (1) are not sufficient to carry out
this section, the Secretary may use up to  1/3  of the fees
collected under subsection (c) of this section for the cost of
providing guarantees of bonds and notes under this section before
depositing the remainder of the fees into the rural economic
development subaccount maintained under section 940c(b)(2)(A) of
this title.
(f) Termination
The authority provided under this section shall terminate on
September 30, 2007.