February 2019
SUPPORTING STATEMENT
7 CFR 4274-D
Intermediary Relending Program (IRP)
(0570-0021)
A. Justification for Renewal of Office of Management and Budget (OMB) Approval Number.
1. Explain the circumstances that make the collection of information necessary.
The Secretary of Agriculture is authorized by 7 USC 1936(b) to make or guarantee loans to eligible entities (Indian tribes, public agencies, cooperatives and nonprofit corporations) so that loans will be reloaned to individuals and entities for the purposes that predominantly serve communities in rural areas and promote community development, establish new businesses, establish and support microlending programs and create or retain employment opportunities.
Subpart D contains regulations for filing applications for loans made by Rural Development (RD) under the Intermediary Relending Program (IRP) to eligible intermediaries and applies to borrowers and other parties involved in making such loans.
2. Indicate how, by whom, and for what purpose the information is to be used. Except for a new collection, indicate the actual use the Agency has made of the information received from the current collection.
The various forms and narrative requirements contained within the regulations, which are requested from the intermediary, are no more than what a prudent commercial lender would require in the private sector if they processed an application without governmental assistance. The information requested is necessary and vital in order for RD to be able to make prudent credit and financial analysis decisions.
The Agency has reviewed the program needs versus the burden placed on the public and is of the opinion that the program is necessary and will be beneficial to all parties involved.
RD, through its respective Specialty Programs Division in Washington, D.C., and its staff located in 47 State Offices throughout the United States will be the primary user of the information collected. Under the Freedom of Information Act, the general public can request the majority of the data requested of the intermediaries by RD except data that is confidential. The Agency will release only limited data during the processing of an application up to the period of time the loan is closed. Based on recent activity and projected funding levels, it is estimated that an average of approximately 240 entities per year will apply for an IRP loan and an average of 29 entities will be approved per year.
Specifically the burden associated with 7CFR 4274-D to be cleared with this docket is as follows:
Intermediaries are authorized to use IRP loans, under certain conditions, to provide revolving lines of credit to ultimate recipients. The conditions are needed to help ensure that this authority is used in a responsible way and only by intermediaries that have sufficient expertise in this specialized and risky credit field. One of the conditions is if an intermediary wants to use the authority to provide revolving lines of credit, the intermediary must provide a detailed description of how the revolving lines of credit will be operated and managed. We estimate that about 35 percent of IRP applications will include proposals to use the authority and the required material to justify it.
RD reserves the right to require intermediaries to turn their promissory notes receivable over to the Agency and provide documents for the assignment of promissory notes and collateral documents. This is required only from intermediaries that are in default or determined to be in danger of defaulting on their loans from the Agency and then only on demand if the Agency determines it is needed to protect the Government’s interest.
This requirement is needed to allow borrowers to request an exception from the general requirements for maintaining loan loss reserves and to give RD sufficient information upon which to approve or disapprove the requests.
This requirement is needed to comply with Executive Order 12372, which requires intergovernmental consultation with State and local officials.
This requirement is needed to help document and control the multiple advances of loan funds to the borrowers. The intermediary may use Form RD 440-11, "Estimate of Funds Needed for 30-day Period Commencing (insert date)," to request the funds.
This is needed to provide a means for the Agency to monitor compliance with the coverage requirements. Fidelity bond coverage is required to protect the borrower and Agency from potential losses due to illegal activities on the part of borrower staff.
The workplan is a very important part of an application, which helps the Agency evaluate the need and support for the applicant’s program in the proposed service area and the applicant’s eligibility and ability to operate successfully. The work plan also documents how the applicant will operate the revolving loan fund after the Agency loan is approved, and provides a basis for servicing the RD loan.
This is needed to help the Agency determine whether an applicant meets eligibility requirements. Applicants that can obtain adequate financing elsewhere are not eligible for the IRP.
Documentation of the Availability of Other Credit
The Agency has not consistently checked for credit elsewhere across the country, as required under IRP regulation. Test for credit was oftentimes submitted in a self-certified statement by intermediary borrowers without Agency validating the information. RBS has developed formal guidance and a template to reiterate the importance of the credit elsewhere test.
This is a criterion for establishing funding priority among applications. In order to determine that an applicant qualifies for the priority points, the Agency must have information about the applicant’s service area.
This is a criterion for establishing funding priority among applications. Applicants can receive priority points by agreeing to require their ultimate recipients to hire workers from low-income families which is a priority of the Agency. The certifications put the ultimate recipients on record as agreeing to comply.
These certifications put the borrower on record as claiming to have met major conditions of the loan approval, before funds are advanced.
These certifications by the borrower are made in connection with a request for RD’s concurrence in approval of a loan to an ultimate recipient. The Agency accepts the intermediary’s certifications that certain requirements have been met, in lieu of requiring complete information regarding the proposed ultimate recipient be submitted to and analyzed by the Agency.
This requirement provides a mechanism for applicants and borrowers to obtain and review additional consideration for RD decisions of an adverse nature.
Form RD 4274-4, “Loan Agreement” (0570-0021)
This agreement serves as a contract between the intermediary and Rural Development Business Programs. This contract is necessary to address the intermediary’s responsibilities for loans under the provisions of 7 CFR 4274-D.
Form RD 4274-1, “Application for Loan (Intermediary Relending Program)” (0570-0021)
This form provides a convenient and consistent way to record basic information needed for all applications to determine eligibility.
This form is used in lieu of Form RD 4274-4, for subsequent loans to borrowers that have previously executed Form RD 4274-4. This shorter form will amend or supplement the original Loan Agreement rather than completely duplicating it.
This form is executed as the evidence of indebtedness of an intermediary to the Agency for an IRP loan.
Form RD 1942-46, “Letter of Intent to Meet Conditions” (0575-0015)
This is needed to document and inform the applicant as to the conditions and requirements the Agency intends to impose if a loan is approved.
This form is required of intermediaries and ultimate recipients in order to assess the potential cumulative impacts of the projects as well as any environmental concerns or problems that are associated with individual projects than can be identified at the earliest planning stages.
Form RD 1951-4, “Report of IRP/RDLF Lending Activity” (0570-0015)
Now referred to as the Lender Interactive Network Connection, this form is fully automated and is now accessible, electronically, by intermediaries to directly input data to establish their ultimate recipients and to report the status of their loan portfolio. This has been accomplished via interface with the Guaranteed Loan System which allows intermediaries to provide financial data regarding their loan balances. This reporting is required in the event the intermediary becomes delinquent in repayment of its loan or otherwise fails to fully comply with the provisions of its work plan or Loan Agreement, or the Agency determines that the intermediary’s IRP revolving fund is not adequately protected by the current sound worth and paying capacity of the ultimate recipients. It includes information on the intermediary’s lending activity, income and expenses, financial condition and a summary of names and characteristics of the ultimate recipients the intermediary has financed, ultimate recipient payment history, and jobs created and/or saved.
Form RD 400-4, “Assurance Agreement” (0575-0018)
This form is provided to assure that the recipient is in compliance and will continue to comply with Title VI of the Civil Rights Act of 1964.
Form RD 400-8, “Compliance Review” (0575-0018)
This form is used to report the results of civil rights compliance reviews on the IRP borrowers. These reviews must be conducted before a loan closes and every 3 years thereafter.
Form RD 402-1, “Deposit Agreement” (0575-0158)
This form is prescribed by the Agency for use in addition to normal security documents. A first lien interest in the intermediary’s revolving fund account will be accomplished by use of this form or similar form developed by the State Regional Office of the General Counsel.
3. Describe whether, and to what extent, the collection of information involves the use of automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g. permitting electronic submission of responses, and the basis for the decision for adopting this means of collection.
In some cases, this collection of information involves the reviewing and signing of documents, and original signatures are needed for legal purposes. In other cases, the respondent must complete a paper form or provide a written narrative. The nature and volume of the material involved and the need for a “paper trail” record of the basis for Agency actions make it difficult to use information technology extensively. The estimates of burden contained in this request are based on the manual completion of paper forms. However, the Department’s E-gov initiative has afforded applicants an opportunity to access application forms and material electronically. Specific program information can be obtained at www.sc.egov.usda.gov via service centers located in rural areas of the states. We anticipate that up to 50 percent of potential applicants will access application material electronically and that the usage will grow tremendously as this means of applying is more broadly communicated.
Also, the Agency is looking at procedures and options in accepting electronic signatures in conjunction with its loan, grant and payment programs unless otherwise prohibited by law. Such signatures may be acceptable on applications, debt instruments, grant agreements, etc.
4. Describe efforts to identify duplication. Show specifically why any similar information already available cannot be used or modified for use for the purposes described in Item 2 above.
The Agency, whenever possible, tries to utilize existing data of the intermediary. Much of the information requested is generally available, but the manner, in which it is maintained in many instances, does not lend itself to adequate organization. RD’s forms use consolidate information in a meaningful manner which enables the Agency to more expeditiously review and analyze the material in order to make an appropriate decision. RD’s role is primarily one of monitoring the intermediary’s actions. Unfortunately, monitoring requires considerable analysis and verification to assure compliance with the Agency’s requirements. Numerous RD requirements involve certifications from the intermediary as well as other third parties involved in the project. Without these verifications, RD could not comply with its legislative requirements (i.e., helping low-income persons). The Agency does not believe there is a duplication of effort in the collection of information under this program. Consequently, there is no known way to utilize existing information.
5. If the collection of information impacts small businesses or other small entities (item 5 of OMB Form 83-I), describe any methods used to minimize burden.
The information is to be collected from nonprofit entities and public organizations; therefore, there will be little probability that small businesses will provide information as the result of this program.
6. Describe the consequence to Federal program or policy activities if the collection is not conducted or conducted less frequently, as well as any technical or legal obstacles to reducing burden.
The information collected under this program is considered to be the minimum necessary to conform to the requirements of existing program regulations that are already established by law such as the requirement for intergovernmental consultation and environmental review. The information collected is considered to be the minimum necessary to ensure that the intent of the statute is achieved while maintaining consistency with OMB circulars, such as A-133, and other requirements.
7. Explain any special circumstances that would cause an information collection to be conducted in a manner:
a. Requiring respondents to report information more than quarterly.
There are no information collection requirements that require specific reporting on more than a quarterly basis.
b. Requiring written responses in less than 30 days.
There are no specific information collection requirements that require less than 30 days response. RD cannot provide required program benefits until supporting documentation is received; therefore, it is to the applicant’s or borrower’s benefit to provide the Agency with the information as soon as possible.
c. Requiring more than an original and two copies.
There are no specific information collection requirements that require more than an original and two copies.
d. Requiring respondents to retain records for more than 3 years.
There are no requirements for respondents to retain records for more than 3 years.
e. Not utilizing statistical sampling.
There are no requirements in connection with a statistical survey.
f. Requiring use of statistical sampling which has not been reviewed and approved by OMB.
There are no requirements for the use of a statistical data classification that has not been reviewed and approved by OMB.
g. Requiring a pledge of confidentiality.
There are no information collection requirements that include a pledge of confidentiality not supported by statute or regulation, not supported by consistent disclosure and data security policies, or which unnecessarily impede the sharing of data with other agencies.
h. Requiring submission of proprietary trade secrets.
There are no requirements for submission of proprietary trade secrets or other confidential information.
8. If applicable, identify the date and page number of publication in the Federal Register of the Agency’s notice soliciting comments on the information collection. Summarize public comments received and describe actions taken by the Agency in response to these comments. Describe efforts to consult with persons outside the Agency to obtain their views on the availability of data, frequency of collection, the clarity of instructions and recordkeeping, disclosure, reporting format (if any), and on data elements to be recorded, disclosed, or reported.
In accordance with the Paperwork Reduction Act of 1995, the Agency published a Notice in the Federal Register on December 6, 2018 (83 FR 62835). No comments were received.
We have consulted with the following individuals regarding this information collection:
Rapoza Associates
Bob Rapoza, Founder & President
1331 G Street, NW,
10th Floor
Washington, DC 20005
(202) 393-5225
Jerry Rickett
President & CEO
Kentucky Highlands Investment Corporation
PO Box 1738
London,
KY 40743-1738
(606) 864-5175
An entity above has been a borrower of the program for many years and is familiar and comfortable with requirements of the program. The other is a diversified governmental affairs research and advocacy firm which conducts policy analysis and develops legislative initiatives in federal policy areas such as low-income housing, community development and tax policy. The program is well received and supported by both organizations.
9. Explain any decision to provide any payment or gift to respondents, other than re-enumeration of contractors or grantees.
No gifts or payments of any kind will be made to respondents.
10. Describe any assurance of confidentiality provided to respondents and the basis for the assurance in statute, regulation, or Agency policy.
The information collected under the provisions of the program is not considered to be of a confidential nature. The data is collected from organizations that ordinarily are required to make their activities available for public scrutiny, such as nonprofit entities.
11. Provide additional justification for any question of a sensitive nature, such as sexual behavior or attitudes, religious beliefs, and other matters that are commonly considered private.
The information collected does not contain any sensitive information such as sexual behavior and attitudes, religious beliefs or other matters commonly considered private.
12. Provide estimate of the hour burden of the collection of information.
Indicate the number of respondents, frequency of response, annual hour burden, and an explanation of how the burden was estimated.
This renewal submission is for 240 respondents, 3,566 responses and 24,820 hours.
See separate spreadsheet for breakout of figures.
Provide estimates of annualized cost to respondents for the hour burdens for collection of information, identifying and using appropriate wage rate categories.
Respondents to these paperwork requirements are generally Loan Officers of IRP intermediaries. Wages are based on annual salary of this occupation classification. The wage class is more comparable to what eligible nonprofit employee compensation would be to process this information. The estimated total burden cost on the public is $2,698,645.85. This total cost includes an additional 31% to account for benefits. See separate spreadsheet for breakout figures.
Cost to the Public (Spreadsheet) |
Fringe Benefits % |
Total |
$2,060,035 |
31% |
$2,698,645 |
13. Provide an estimate of the total annual cost burden to respondents or recordkeepers resulting from the collection of information, (do not include the cost of any hour burden shown in items 12 and 14). The cost estimates should be split into components: (a) a total capital and start-up cost component annualized over its expected use of life; and (b) a total operation and maintenance and purchase of services component.
There are no capital/startup or operation/maintenance costs associated with this collection.
14. Provide estimates of annualized cost to the Federal Government.
Rural Development Business Programs estimates the cost to the Federal Government to administer the activities of this program to be $2,675,862 per year, broken down as follows:
Salaries and benefits: $2,800,001
Travel: $ 168,000
*Other Administrative: $ 140,000
*Other administrative costs may include: contract costs, indirect (overhead) costs, activities related to eligibility determinations, monitoring of programs and projects, services related to accounting, audits, management of property, supplies, equipment, utilities, maintenance of space, etc.
The State Office Specialists average GS 12/5 salaries and spend an average of 20 hours per week performing outreach activities, processing loans, etcetera. There are approximately 47 State Offices. Wages used are from GS Basic Locality 2018 pay rates and include a 40.25% increase for benefits.
Wage (GS 12/5) |
Fringe Benefits % |
Time (20hrs./wk*52wks) |
State Offices |
Total |
34.54 |
40.25 |
1040 |
47 |
$2,367,862 |
|
|
|
Travel |
$168,000 |
|
|
|
Other Admin. |
$140,000 |
|
|
|
Grand Total |
$2,675,862 |
15. Explain the reasons for any program changes or adjustments reported in items 13 or 14 of the OMB Form 83-I.
The addition of the “Availability of Other Credit” documentation resulted in an increase in responses and burden hours by 240. Test for credit was oftentimes submitted in a self-certified statement by intermediary borrowers without Agency validating the information. RBS has developed formal guidance and a template to reiterate the importance of the credit elsewhere test.
16. For collection of information whose results will be published, outline plans for tabulation and publication.
This collection of information will not be published for statistical purposes.
17. If seeking approval to not display the expiration date for OMB approval of the information collection, explain the reasons that display would be inappropriate.
It is not cost effective for the Agency to display the expiration date on the forms due to the large volume of forms used by these offices.
18. Explain each exception to the certification statement identified in item 19 on OMB 83-I.
There are no exceptions requested.
19. How is this information collection related to the Service Center Initiative (SCI)? Will the information collection be part of the one stop-shopping concept?
This program will utilize the Service Center Initiative to authenticate applicants and for electronic submission of the forms and written documentation.
| File Type | application/vnd.openxmlformats-officedocument.wordprocessingml.document |
| File Title | May 29, 2003 |
| Author | dberger |
| File Modified | 0000-00-00 |
| File Created | 2021-01-15 |