FR Publication - 60-day notice

70086

Federal Register / Vol. 86, No. 234 / Thursday, December 9, 2021 / Notices

amendment to record). All requests
must state clearly and concisely what
record is being contested, the reasons
for contesting it, and the proposed
amendment to the record.
NOTIFICATION PROCEDURES:

Individuals may be notified if a record
in this system of records pertains to
them when the individuals request
information utilizing the same
procedures as those identified in the
‘‘RECORD ACCESS PROCEDURES’’
paragraph above.
EXEMPTIONS PROMULGATED FOR THE SYSTEM:

None.
HISTORY:

On April 30, 2008 (73 FR 23409–
23412, Docket No. APHIS–2008–0039),
USDA/APHIS–11, ‘‘Emergency
Management Response System’’ was
published as a new system of records
and effective on June 9, 2008.
[FR Doc. 2021–26684 Filed 12–8–21; 8:45 am]
BILLING CODE 3410–34–P

DEPARTMENT OF AGRICULTURE
Rural Business-Cooperative Service
[Docket #: RBS–21–Business–0036]

Notice of Funding Opportunity for the
Food Supply Chain Guaranteed Loan
Program
Rural Business—Cooperative
Service, USDA.
ACTION: Notice.
AGENCY:

The Rural Business—
Cooperative Service (Agency), an agency
of the United States Department of
Agriculture (USDA) Rural Development
mission area (RD) announces the
availability of approximately
$1,000,000,000 in loan guarantees,
applicant and application requirements,
and servicing requirements under the
Food Supply Chain (FSC) Guaranteed
Loan Program for fiscal year (FY) 2022.
Loan guarantees will be made to lenders
to facilitate financing to qualified
borrowers and projects for the start-up
or expansion of activities in the middle
of the food supply chain, particularly
the aggregation, processing,
manufacturing, storage, transportation,
wholesaling, or distribution of food, to
increase capacity and help create a more
resilient, diverse, and secure U.S. food
supply chain.
DATES: Completed applications may be
submitted beginning December 9, 2021.
Awards will be made no earlier than
February 7, 2022. Applications will be
accepted until funds are exhausted.

khammond on DSKJM1Z7X2PROD with NOTICES

SUMMARY:

VerDate Sep<11>2014

17:41 Dec 08, 2021

Jkt 256001

You are encouraged to
contact the Agency to discuss your
project and ask any questions about the
program or application process.
Applications will only be accepted
electronically by following the
directions provided at https://
www.rd.usda.gov/
foodsupplychainloans.
Entities wishing to apply for
assistance may download the
application documents and
requirements delineated in this notice
from: https://www.rd.usda.gov/
foodsupplychainloans.
FOR FURTHER INFORMATION CONTACT: Jeff
Hudson, Rural Business—Cooperative
Service, United States Department of
Agriculture, 1400 Independence Avenue
SW, Mail Stop 3201, Room 5801—
South, Washington, DC 20250–3201;
[email protected], or
phone 715–345–7636.
SUPPLEMENTARY INFORMATION: All
applicants are responsible for any
expenses incurred in developing their
applications.
The lender is responsible for assuring
that all requirements for making,
securing, servicing, and collecting the
loan have been met.
Whether specifically stated or not,
whenever Agency approval is required,
it must be in writing. Copies of all forms
and regulations referenced in this notice
may be obtained from any Agency office
and from the USDA RD website at
https://www.rd.usda.gov/
foodsupplychainloans.
ADDRESSES:

In addition, the Agency highlights the
importance of strengthening resiliency
of the broader food supply chain,
including through addressing current
supply chain related disruptions. The
Agency will consider applications as
they are submitted. If available funding
is less than what is requested by
applications under consideration, the
Agency will score each eligible
application based on the point system
described herein. When applications on
hand have the same priority score, the
Agency will give preference to
applications involving guaranteed loans
from veterans.
Hemp Related Projects: Please note
that no assistance or funding from this
program can be provided to a hemp
producer unless they have a valid
license issued from an approved State,
Tribal or Federal plan as per section
10113 of the Agriculture Improvement
Act of 2018, Public Law 115–334.
Verification of valid hemp licenses will
occur at the time of award.

A. Program Description and Overview
(a) Purpose of the program. Food
Supply Chain (FSC) guaranteed loans
are available to qualified applicants and
projects to facilitate financing for the
start-up or expansion of activities in the
middle of the food supply chain,
particularly the aggregation, processing,
manufacturing, storing, transporting,
wholesaling, or distribution of food, to
increase capacity and help create a more
resilient, diverse, and secure U.S. food
supply chain. As reflected in the public
comments to AMS–TM–21–0034,
Overview
Supply Chains for the Production of
Federal Agency Name: Rural
Agricultural Commodities and Food
Business—Cooperative Service.
Products, 86 FR 20652 (April 21, 2021),
Funding Opportunity Title: Food
Supply Chain Guarantee Loan Program. financing for infrastructure as a strategy
to strengthen the food supply chain was
Announcement Type: Initial Notice.
identified as a need not only for small
Assistance Listing Number: 10.380.
and mid-sized meat and poultry
Dates: Applications will be accepted
processors, but across other stages of the
beginning December 9, 2021.
food supply chain, including
Application acceptance will continue
distribution and aggregation.
until all funds are expended.
This program will expand access to
Administrative: Applicants are
financing for food systems infrastructure
encouraged to consider projects that
will advance the following key priorities in the near term and will serve as a pilot
program to inform the other programs
(additional information on the key
authorized under Section 1001 of the
priorities is available at https://
American Rescue Plan Act of 2021
www.rd.usda.gov/priority-points):
• Assisting rural communities recover (American Rescue Plan Act). This
program will facilitate access to
economically from the impacts of the
affordable capital to address the ongoing
COVID–19 pandemic, particularly
need for food systems enterprises in
disadvantaged communities;
America’s rural and urban communities,
• Ensuring all rural residents have
as there are no geographic restrictions.
equitable access to Rural Development
(b) Statutory authority. Section
(RD) programs and benefits from RD
1001(b)(4) of the American Rescue Plan
funded projects; and
Act authorizes the Secretary of
• Reducing climate pollution and
Agriculture to ‘‘. . . make loans and
increasing resilience to the impacts of
grants and provide other assistance to
climate change through economic
maintain and improve food and
support to rural communities.

PO 00000

Frm 00005

Fmt 4703

Sfmt 4703

E:\FR\FM\09DEN1.SGM

09DEN1

khammond on DSKJM1Z7X2PROD with NOTICES

Federal Register / Vol. 86, No. 234 / Thursday, December 9, 2021 / Notices
agricultural supply chain resiliency.’’
Given this authority, and appropriation
provided for this purpose in Section
1001, Paragraph (a), $100 million in
budget authority is being made available
for the Food Supply Chain Guaranteed
Loan Program.
(c) Notice overview.
(1) This notice contains general
provisions for making and servicing FSC
loans guaranteed by the Agency and
applies to lenders, holders, borrowers,
and other parties involved in making,
guaranteeing, holding, servicing, or
liquidating such loans.
(2) The lender is responsible for
assuring compliance with all
requirements for making, securing,
servicing, and collecting repayment on
guaranteed loans.
(3) Whether specifically stated or not,
whenever Agency approval is required,
the lender is obligated to obtain written
approval from the Agency.
(4) All forms and regulations
referenced in this notice may be
obtained from the USDA Rural
Development website at https://
www.rd.usda.gov/
foodsupplychainloans.
(d) Definitions. The following
definitions are applicable to this notice:
Administrator. The Administrator of
Rural Business—Cooperative Service
within the Rural Development mission
area of the U.S. Department of
Agriculture.
Affiliate. A person where one of the
following circumstances exists:
(1) The person controls or has the
power to control another person, or a
third party or parties controls or has the
power to control both. Factors such as
ownership, management, current and
previous relationships with or ties to
another person, and contractual
relationships, shall be considered in
determining whether affiliation exists. It
does not matter whether control is
exercised, so long as the power to
control exists. Entities owned and
controlled by Indian Tribes, Alaska
Native Corporations (ANCs),
Community Development Corporations
(CDCs), Native Hawaiian Organizations
(NHOs) or wholly owned entities of
Indian Tribes, ANCs, NHOs, or CDCs,
are not considered to be affiliated with
other entities owned by these entities
solely because of their common
ownership or common management.
(2) There is a family relationship and
identical or substantially identical
business or economic interests amongst
persons (such as where an immediate
family member operates entities in the
same or similar industry in the same
geographic area); however, a person may
rebut such determination with evidence

VerDate Sep<11>2014

17:41 Dec 08, 2021

Jkt 256001

showing that the business or economic
interests are not identical or
substantially identical.
Agency. The Rural Business—
Cooperative Service or successor
Agency assigned by the Secretary of
Agriculture to administer the Food
Supply Chain Guaranteed Loan
Program.
Arm’s-length transaction. A
transaction in which the buyer and
seller act independently and have no
relationship to each other. The concept
of an arm’s length transaction allows the
market to ensure that both parties in the
deal are acting in their own self-interest
and are not subject to any pressure or
duress from the other party.
Assignment Guarantee Agreement. A
signed, Agency-approved agreement
among the Agency, the lender, and the
holder setting forth the terms and
conditions of an assignment of a
guaranteed portion of a loan or note
from the lender to the holder.
Bond. A form of debt security in
which the authorized issuer (borrower)
owes the bond holder (lender) a debt
and is obligated to pay interest at
specified intervals and repay the
principal at a specified maturity date.
An explanation of the type of bond and
other bond stipulations must be
attached to the bond.
Borrower. The person that borrows, or
seeks to borrow, money from the lender
(including any party or parties liable for
the guaranteed loan except guarantors)
through a loan guaranteed under this
program notice.
Certificate of Incumbency and
Signature. An Agency-approved form
used to validate authenticity of Agency
representatives’ signatures and titles.
Collateral. The asset(s) pledged by the
borrower to the lender to secure the
guaranteed loan.
Commercially available. A system
that meets the requirements of either
paragraph (1) or (2) of this definition.
(1) A domestic or foreign system that:
(i) Has both a proven and reliable
operating history and proven
performance data for at least one year
specific to the use and operation to the
proposed application;
(ii) Is based on established design and
installation procedures and practices
and is replicable;
(iii) Has professional service
providers, trades, large construction
equipment providers, and labor who are
familiar with installation procedures
and practices;
(iv) Has proprietary and balance of
system equipment and spare parts that
are readily available;

PO 00000

Frm 00006

Fmt 4703

Sfmt 4703

70087

(v) Has service that is readily
available to properly maintain and
operate the system; and
(vi) Has an existing established
warranty that is valid in the United
States for major parts and labor; or
(2) A domestic or foreign system that
has been certified by a recognized
industry organization whose
certification standards are acceptable to
the Agency.
Complete application. An application
that contains all parts necessary for the
Agency to determine borrower and
project eligibility, and the financial
feasibility and technical merit of the
project and contains sufficient
information to determine a priority
score for the application, if applicable,
as determined by the Agency.
Conditional Commitment. An
Agency-approved form in which the
Agency agrees that, in accordance with
applicable provisions of this notice and
related forms, it will execute the loan
note guarantee, subject to the conditions
and requirements specified in
applicable provisions of this notice and
in the conditional commitment.
Conflict of interest. A situation in
which a person has personal,
professional, or financial interests that
prevents, or appears to prevent the
person from acting impartially. For
purposes of this notice, conflict of
interest also includes, but is not limited
to:
(1) A person acting as a compensated
agent of the borrower and the lender on
the same guaranteed loan;
(2) Distribution or payment of
guaranteed loan funds to an individual
owner, partner, stockholder, or member
of the borrower, or to a beneficiary or
immediate family member of the
borrower; or
(3) Refinancing debt that is owned by
a loan packager, broker, or referral agent
or its affiliates.
Cooperative. An entity that is legally
chartered by the State or Tribe in which
it operates as a cooperatively-operated
business, or an entity that is not legally
chartered as a cooperative but is owned
and operated for the benefit of its
members, with returns of residual
earnings paid to such members on the
basis of patronage.
Credit evaluation. An analysis and
evaluation by the lender of the credit
factors associated with each application
to ensure loan repayment using credit
documentation procedures and an
underwriting process that is consistent
with industry standards and the lender’s
written policy and procedures.
Debt Collection Improvement Act. The
Debt Collection Improvement Act of
1996, 31 U.S.C. 3701 et seq.

E:\FR\FM\09DEN1.SGM

09DEN1

khammond on DSKJM1Z7X2PROD with NOTICES

70088

Federal Register / Vol. 86, No. 234 / Thursday, December 9, 2021 / Notices

Debt service coverage ratio. The ratio
obtained when taking earnings before
interest, taxes, depreciation, and
amortization less reasonably expected
replacement capital expenditures
divided by the annual debt service
(principal and interest payments) of the
borrower.
Default. The condition that exists
when a borrower is not in compliance
with the promissory note, the loan
agreement, or other documents relating
to the loan. Default could be a monetary
or non-monetary default.
Delinquency/Delinquent loan. A loan
for which a scheduled loan payment is
more than 30 days past due and cannot
be cured within 30 days.
Existing business. A business that has
been in operation for at least one full
year and has achieved full operational
capacity or stable operations in
accordance with its executive summary,
feasibility study, historical financial
records, and financial projects, as
determined by the Administrator.
Mergers or changes in the business
name or legal type of entity of a
business that has been in operation for
at least one full year are considered to
be existing businesses as long as there
is not a significant change in operations.
Newly formed entities that are buying
existing businesses will be considered
an existing business as long as the
business being bought remains in
operation and there is no significant
change in operations or expertise of
management.
Existing lender debt. A debt owed by
a borrower to the same lender that is
applying for or has received the Agency
guarantee.
Farmer or rancher cooperative. An
entity that is owned and controlled by
agricultural producers and that is
incorporated, or otherwise recognized
by the State or Tribe in which it
operates as a cooperatively-operated
business or an entity that is not legally
chartered as a cooperative but is owned
and operated for the benefit of its
members, with returns of residual
earnings paid to such members on the
basis of patronage.
Federal debt. Debt owed to the
Federal Government that is subject to
collection under the Debt Collection
Improvement Act.
Final loss claim. The Agency’s
payment of a final settlement amount
with the lender after the collateral on a
delinquent loan is liquidated or after
settlement and compromise actions
have been completed and as further set
forth in 7 CFR 5001.521(e).
Food. For the purpose of this notice,
food or food product for human
consumption except alcoholic

VerDate Sep<11>2014

17:41 Dec 08, 2021

Jkt 256001

beverages, tobacco, and dietary
supplements.
Future recovery. Funds collected by
the lender after a final loss claim is
processed.
Guaranteed loan. A loan made and
serviced by a lender for which the
Agency and lender have entered into a
lender’s agreement and for which the
Agency has issued a loan note
guarantee. Unless otherwise specified,
guaranteed loan refers to a loan that the
Agency has guaranteed under this
notice.
Guarantor. A person who is legally
obligated to make full payment to the
Agency under an Agency-approved
written agreement in the event that the
borrower fails to meet its payment
obligations on its guaranteed loan.
Holder. A person, other than the
lender, who owns all or part of the
guaranteed portion of the loan with no
servicing responsibilities.
Immediate family. Individuals who
live in the same household or who are
closely related by blood, marriage, or
adoption, including a spouse, domestic
partner, parent, child, sibling, aunt,
uncle, grandparent, grandchild, niece,
nephew, or first cousin.
Indian tribe. Means the term as
defined in 25 U.S.C. 5131.
In-house expenses. Expenses
associated with activities that are
routinely the responsibility of a lender’s
internal staff, including in-house
lawyers, or its agents and that are
normally incurred for administration of
the loan. In-house expenses include, but
are not limited to, employees’ salaries,
staff lawyers, travel, and overhead.
Inspector. A qualified consultant who
has at least three years of experience
and has completed at least five
inspections on similar type projects.
Intangible asset. An asset that lacks
physical substance. This includes, but is
not limited to, copyrights, patents,
capitalized franchise fees, goodwill,
customer lists, software, organizational
expenses, loan closing expenses, social
media assets, and bond fees.
Interest. A fee paid by a borrower to
the lender as a form of compensation for
the use of money. When money is
borrowed, interest is paid as a fee over
a certain period of time (typically
months or years) to the lender as a
percentage of the principal amount
owed. The term interest does not
include default or penalty interest or
late payment fees or charges.
Interest termination date. The date on
which no further interest will be
payable by the Agency under the loan
note guarantee.
Interim financing. A temporary or
short-term loan made with the clear

PO 00000

Frm 00007

Fmt 4703

Sfmt 4703

intent when the loan is made that it will
be repaid through another loan that
provides permanent financing. Interim
financing is frequently used to pay
construction and other costs associated
with a planned project, with permanent
financing to be obtained after
completion of project construction.
Lender. The eligible lender approved
by the Agency to originate, service, and
collect payments on loans guaranteed
under this notice.
Lender’s agreement. The Agencyapproved form of contract between the
Agency and the lender setting forth the
lender’s guaranteed loan
responsibilities.
Liquidation expenses. Costs directly
associated with the liquidation of
collateral, including, without limitation,
costs associated with preparing
collateral for sale (e.g., repairs and
transport), the sale (e.g., advertising,
public notices, auctioneer expenses, and
foreclosure fees), and conducting
appraisals. Legal fees are considered
liquidation expenses provided that the
fees are reasonable as determined by the
Agency and cover legal issues
pertaining to the liquidation that could
not be properly handled by the lender
and its in-house legal staff. Liquidation
expenses do not include in-house
expenses.
Loan agreement. The agreement
between the borrower and lender
containing the terms and conditions of
the loan and the responsibilities of the
borrower and lender, including the
terms of the borrower’s repayment of the
loan.
Loan classification. The process by
which loans are examined and
categorized by the probability of default
and degree of potential loss in the event
of default.
Loan note guarantee. The Agencyapproved form containing the terms and
conditions of the guarantee of an
identified guaranteed loan.
Loan packager. A person, other than
the applicant borrower or lender, that
prepares a loan application package on
behalf of the borrower or lender.
Loan-to-discounted value. The ratio of
the dollar amount of a loan to the
discounted dollar value of the collateral
pledged as security for the loan.
Material adverse change. Any change
in circumstance associated with a
guaranteed loan, including without
limitation, any change in the purpose of
the loan, the borrower’s financial
condition or collateral, that,
individually or in the aggregate, has
jeopardized, or could be reasonably
expected to jeopardize, the borrower’s
repayment of the guaranteed loan.

E:\FR\FM\09DEN1.SGM

09DEN1

khammond on DSKJM1Z7X2PROD with NOTICES

Federal Register / Vol. 86, No. 234 / Thursday, December 9, 2021 / Notices
Monetary default. A failure to make a
scheduled or required payment on a
guaranteed loan.
Multi-note system. An option for the
lender to provide one promissory note
for the unguaranteed portion and a
separate promissory note(s) for the
guaranteed portion of the loan. All
promissory notes must reflect the same
payment terms.
National Appeals Division (NAD). A
division of the United States
Department of Agriculture as described
in 7 CFR part 11.
Negligent loan origination. The failure
of a lender to perform those services
that a reasonably prudent lender would
perform in originating its own portfolio
of loans that are not guaranteed. The
term includes the concepts of failure to
act, not acting in a timely manner, or
acting in a manner contrary to the
manner in which a reasonably prudent
lender would act.
Negligent loan servicing. The failure
of a lender to perform those services or
actions that a reasonably prudent lender
would perform in servicing (including
liquidation of) its own portfolio of loans
that are not guaranteed. The term
includes the concepts of failure to act,
not acting in a timely manner, or acting
in a manner contrary to the manner in
which a reasonably prudent lender
would act.
New business. A startup or otherwise
new business that has been in operation
for less than one full year and a business
that has been in operation for at least
one full year and has not achieved full
operational capacity or stable operations
in accordance with its executive
summary, feasibility study, historical
financial records, and financial projects,
as determined by the Administrator,
including a new enterprise or new
affiliate of an existing business moving
or expanding into a new location
involving new market or labor areas.
Non-monetary default. A situation
where a borrower is not in compliance
with the covenants or requirements of
the loan documents or program
requirements.
Parity. A lien position whereby two or
more lenders or loans share a security
interest of equal priority in collateral.
Participation. Sale of an interest in a
loan by the lead lender to one or more
participating lenders wherein the lead
lender retains the note, collateral
securing the note, and all responsibility
for managing and servicing the loan.
Participants are dependent upon the
lead lender for protection of their
interests in the loan. The relationship is
typically formalized by a participation
agreement. The participants and the

VerDate Sep<11>2014

17:41 Dec 08, 2021

Jkt 256001

borrower have no rights or obligations to
one another.
Passive investor. An equity investor
who does not actively participate in
management and operation decisions of
the borrower or any affiliate of the
borrower as evidenced by a contractual
agreement.
Person. An individual or entity
organized under the laws of a State or
an Indian Tribe.
Program. Program means the Food
Supply Chain Guaranteed Loan Program
authorized by the American Rescue Plan
Act of 2021 and administered by the
Agency.
Promissory note. The legal instrument
evidencing debt executed by the
borrower to a lender with stipulated
repayment terms. The term promissory
note includes bonds and other related
debt instruments issued by the lender to
a borrower.
Protective advances. Advances made
by the lender for the purpose of
preserving and protecting the collateral
where the borrower has failed to, and
will not or cannot, meet its obligations
to protect or preserve collateral.
Protective advances include, but are not
limited to, advances for property taxes,
rent, hazard and flood insurance
premiums, emergency repairs and
annual assessments that protect the
collateral. Legal and accounting fees are
not protective advances.
Public body. A state, municipality,
county, or other political subdivision of
a State; a special purpose district; an
Indian tribe on a Federal or State
reservation or other federally-recognized
Indian tribe; or an organization
controlled by any of the above.
Qualified consultant. An independent
third-party person possessing the
knowledge, expertise, and experience to
perform the specific task required.
Socially disadvantaged group. A
group whose members have been
subjected to racial, ethnic, or gender
prejudice because of their identity as
members of a group without regard to
their individual qualities.
Spreadsheet. A table containing data
from a series of financial statements of
a business over a specified period. A
financial statement analysis normally
contains spreadsheets for balance sheet
and income statement items and
includes a cash flow analysis and
commonly used ratios. The spreadsheets
enable a reviewer to easily scan the
data, spot trends, and make
comparisons.
State. Any of the 50 States of the
United States, the Commonwealth of
Puerto Rico, the District of Columbia,
the U.S. Virgin Islands, Guam,
American Samoa, the Commonwealth of

PO 00000

Frm 00008

Fmt 4703

Sfmt 4703

70089

the Northern Mariana Islands, the
Republic of Palau, the Federated States
of Micronesia, and the Republic of the
Marshall Islands.
Subordination. An agreement among
the lender, borrower, and Agency
whereby lien priorities on certain assets
pledged to secure payment of the
guaranteed loan will be reduced to a
position junior to, or on parity with, the
lien position of another loan.
Transfer and assumption. The
Agency-approved conveyance by a
borrower to an assuming borrower of the
assets, collateral, and liabilities of the
loan in return for the assuming
borrower’s binding promise to pay the
outstanding debt.
Veteran. For the purposes of applicant
selection, a veteran is a person who
served in the active military, naval, or
air service and was discharged or
released therefrom under conditions
other than dishonorable as defined in 38
U.S.C. 101(2).
5. Accounting terms. Accounting
terms not otherwise defined in this part
shall have the definition ascribed to
them under Generally Accepted
Accounting Principles (GAAP).
B. Federal Award Information
Type of Awards: Guarantee.
Award Amounts: The maximum,
aggregate, loan amount that a borrower
may receive is $40 million. For fiscal
year 2022, the Agency reserves not less
than 19 percent of the funds made
available to the Food Supply Chain
Guaranteed Loan Program until June 7,
2022 for entities that establish and
facilitate the slaughter and initial
processing of meat and poultry to
increase capacity and help create a more
resilient, diverse, and secure U.S. food
supply chain.
Due Date for Applications:
Applications will be accepted until
funds are expended.
Anticipated Award Date: Beginning
not earlier than February 7, 2022.
Performance Period: None.
Type of Assistance Instrument: Loan
note guarantee.
Loan guarantee limits:
(a) Loan amount. The total amount of
guaranteed loans under this notice to
one borrower, including the aggregate
amount of guaranteed loans to affiliate
entities dependent upon another’s
operations and generation of revenue for
loan repayment, (including the
guaranteed and unguaranteed portions,
and for subsequent loans the
outstanding principal and interest
balance of any existing FSC guaranteed
loans, and the new loan request) must
not exceed $40 million.

E:\FR\FM\09DEN1.SGM

09DEN1

70090

Federal Register / Vol. 86, No. 234 / Thursday, December 9, 2021 / Notices

(b) Percentage of guarantee. The
percentage of guarantee will be 90
percent for loans with fixed interest
rates on the guaranteed portion of the
loan and for which the interest rate does
not exceed the current Wall Street
Journal prime rate plus 200 basis points.
All other loans shall be guaranteed at 80
percent.

khammond on DSKJM1Z7X2PROD with NOTICES

C. Eligibility Information
(a) Eligible borrowers. Borrowers must
meet all the following eligibility
requirements. Applications which fail to
meet any of these requirements will be
deemed ineligible and will not be
evaluated further.
(1) A borrower must be a cooperative
organization, corporation, partnership,
or other legal entity organized and
operated on a profit or nonprofit basis;
an Indian tribe on a Federal or State
reservation or other federally recognized
tribal group; a public body; or an
individual. In addition a borrower must
be:
(i) A business engaged in or proposing
to engage in aggregating, processing,
manufacturing, storing, transporting,
wholesaling, or distributing food; or
(ii) A business with existing or
proposed contractual, lease, or service
agreements with another entity or
entities, including affiliated entities,
which are engaged or proposing to
engage in aggregating, processing,
manufacturing, storing, transporting,
wholesaling, or distributing food.
(2) A borrower must be a business
engaged or proposing to engage in
commercial food product project(s)
either directly or through contractual,
lease or service agreements with another
entity or entities including affiliated
entities. A commercial food product is
a product in regular production that is
routinely sold in significant quantities
to the general public or industry.
(3) Borrowers engaged or proposing to
engage in processing of meat, poultry,
processed egg products, and
Siluriformes either directly or through
contractual, lease or service agreements
with another entity or entities including
affiliated entities, must comply with the
requirements of the U.S. Department of
Agriculture (USDA) Food Safety and
Inspection Service. Borrowers engaged
or proposing to engage in processing of
other foods and food ingredients either
directly or through contractual, lease or
service agreements with another entity
or entities including affiliated entities,
must comply with the requirements of
the Food and Drug Administration. All
borrowers must comply with
requirements of state, tribal and local
governments.

VerDate Sep<11>2014

17:41 Dec 08, 2021

Jkt 256001

(4) Borrowers, including affiliates of
the borrower engaged or proposing to
engage in, either directly or through
contractual, lease or service agreements
with another entity or entities including
affiliated entities, beef, pork, chicken, or
turkey processing must not hold a
market share greater than or equal to the
entity that holds the fourth largest share
of that market for the species addressed
in the application.
(5) Individual borrowers must be
citizens of the United States or reside in
the United States after being legally
admitted for permanent residence. For
purposes of this subpart, citizens and
residents of the Republic of Palau, the
Federated States of Micronesia,
American Samoa, Guam, the
Commonwealth of the Northern Mariana
Islands, and the Republic of the
Marshall Islands are considered U.S.
citizens. Individuals that reside in the
United States after being legally
admitted for permanent residence must
provide a permanent green card as
evidence of eligibility.
(6) All applications for assistance will
be accepted and processed without
regard to the availability of credit from
any other source.
(b) Eligible uses of funds. Borrowers
must demonstrate, to the Agency’s
satisfaction, that loan funds will remain
in the United States and the facility
being financed and the uses of the loan
funds will support the start-up or
expansion of activities in the middle of
the food supply chain, particularly the
aggregation, processing, manufacturing,
storage, transportation, wholesaling, or
distribution of food, to increase capacity
and help create a more resilient, diverse,
and secure U.S. food supply chain.
Eligible uses of funds include, but are
not limited to, the following:
(1) Purchase and development of
land, buildings, or infrastructure for
public or private commercial enterprises
or industrial properties, including
expansion or modernization.
(2) Leasehold improvements when the
lease contains no reverter clauses or
restrictive clauses that would impair the
use or value of the property as security
for the loan. The term of the lease must
be equal to or greater than the term of
the loan.
(3) Constructing or equipping
facilities for lease to public or private
enterprises engaged in commercial or
industrial operations. Financing for
mixed-use properties, involving both
commercial business and residential
space, is authorized provided that at
least 50 percent of the building’s
projected revenue will be generated
from food supply chain related business
uses.

PO 00000

Frm 00009

Fmt 4703

Sfmt 4703

(4) Purchase of machinery and
equipment including but not limited to
manufacturing systems, information
technology systems, and commercially
available new technologies that promote
worker safety or food safety.
(5) Debt refinancing when it is
determined that the project is viable and
refinancing is necessary to improve cash
flow or obtain appropriate lien
positions. Debt being refinanced must
be debt of the borrower reflected on its
balance sheet. The lender’s analysis
must document that, except for the
refinancing of lines of credit, the debt
being refinanced was for an eligible loan
purpose under this subpart. Existing
lender debt may be included provided
that, at the time of application, the loan
being refinanced has been active and
current for at least the past 12 months
(current status cannot be achieved by
the lender forgiving the borrower’s debt
or servicing actions that impact the
borrower’s repayment schedule), and
the lender is providing better rates or
terms. Unless the amount to be
refinanced is owed directly to the
Federal government or is federally
guaranteed, no more than 50 percent of
loan funds may be used to refinance
existing debt.
(6) Takeout of interim financing.
Guaranteeing a loan that provides for
permanent, long-term financing after
project completion to pay off a lender’s
interim loan will not be treated as debt
refinancing provided that the lender
submits a request for preliminary
eligibility review or application that
proposes such interim financing prior to
closing the interim loan. The borrower
must take no action that would have an
adverse impact on the environment or
limit the range of alternatives to be
considered by the Agency during the
environmental review process. The
Agency will not guarantee takeout of
interim financing loans that prevent a
meaningful environmental assessment
prior to Agency loan approval. Even for
projects with interim financing, the
Agency cannot approve the loan and
issue a Conditional Commitment until
the environmental process is complete.
The Agency assumes no responsibility
or obligation for interim loans.
(7) Purchase of membership, stocks,
bonds, or debentures necessary to obtain
a loan from Farm Credit System
institutions and other lenders provided
such purchase is required for all their
borrowers and is the minimum amount
required.
(8) The purchase of cooperative stock
by individual farmers or ranchers in a
farmer or rancher cooperative, the
purchase of transferable cooperative
stock, the purchase of stock in a

E:\FR\FM\09DEN1.SGM

09DEN1

khammond on DSKJM1Z7X2PROD with NOTICES

Federal Register / Vol. 86, No. 234 / Thursday, December 9, 2021 / Notices
business by employees forming an
Employee Stock Ownership Plan or
worker cooperative, and loans to a fund
that invests primarily in cooperatives in
accordance with the provisions of this
notice.
(9) Taxable corporate bonds when the
bonds will be fully amortized over the
life of the bond and comply with all
provisions of (i) through (v) below:
(i) The bond holder (lender) retains
7.5 percent of the bond.
(ii) The bonds must be fully secured
with collateral.
(iii) The bonds must only provide for
a trustee when the trustee is totally
under the control of the lender. The
bonds must provide no rights to bond
holders other than the right to receive
the payments due under the bond. For
instance, the bonds must not provide for
bond holders replacing the trustee or
directing the trustee to take servicing
actions, such as accelerating the bonds.
Convertible bonds are not eligible under
this paragraph due to the potential
conflict of interest of a lender having an
ownership interest in the borrower.
(iv) The bond issuer (borrower) must
obtain the services and opinion of an
experienced bond counsel who must
present a legal opinion stating that the
bonds are legal, valid, and binding
obligations of the issuer and that the
issuer has adhered to all applicable
laws.
(v) The bond holder (lender) must
purchase all the bonds and comply with
all Agency regulations. There must be a
bond purchase agreement between the
issuer and the bond holder. The bond
purchase agreement must contain
similar language to what is required to
be in a loan agreement in accordance
with this notice and must be in form
and substance satisfactory to the
Agency. The bond holder is responsible
for all servicing of the loan (bond),
although the bond holder may contract
for servicing assistance, including
contracting with a trustee who remains
under the lender’s total control.
(10) Interest (including interest on
interim financing) during the period
before the first principal payment
becomes due or when the facility
becomes income producing, whichever
is earlier.
(11) Fees and charges outlined in the
Loan Guarantee Limits section, above.
(12) Feasibility studies.
(13) Educational, innovation, and
training facilities and equipment and
kitchen, business, and other multitenant incubator facilities and
equipment when not eligible for Rural
Housing Service, Community Facilities
assistance.

VerDate Sep<11>2014

17:41 Dec 08, 2021

Jkt 256001

(14) Pollution control and abatement
as related to transportation, waste
management and other activities related
to otherwise eligible projects.
(15) Startup costs, working capital,
inventory, and supplies in the form of
a permanent working capital term loan.
(c) Ineligible entities.
(1) An entity is ineligible if any of the
conditions identified in paragraphs (i)
through (iv) below apply to the
borrower, any owner with more than 20
percent ownership interest in the
borrower (does not include passive
investors), or any owner with control of
the borrower.
(i) There is an outstanding judgment
obtained by the U.S. in a Federal Court
(other than U.S. Tax Court).
(ii) There is any delinquency on
payment of Federal income taxes.
(iii) There is any delinquency on a
Federal Debt.
(iv) There is a debarment or
suspension from receiving Federal
assistance.
(2) An entity is ineligible if it derives
more than 15 percent of its annual gross
revenue (including any lease income
from space or machines) from gambling
activity, excluding State-authorized
lottery proceeds or Tribal-authorized
gaming proceeds, as approved by the
Agency, conducted for the purpose of
raising funds for the approved project.
(3) An entity is ineligible if it derives
income from activities of a prurient
sexual nature.
(4) An entity is ineligible if it derives
income from illegal drugs, drug
paraphernalia, or any other illegal
product or activity as defined under
Federal statute. A borrower that intends
to lease space or enter into a power
purchase agreement with a marijuana
dispensary is not eligible since the
borrower would be receiving income
from the marijuana operation which is
a violation of federal laws since
marijuana is a controlled substance
under federal law and subject to federal
prosecution under the Controlled
Substances Act (21 U.S.C. 801).
(5) An entity is ineligible if it is a
charitable or fraternal organization. For
purposes of this section, an organization
that derives more than 10 percent of its
annual gross revenue from tax
deductible charitable donations, based
on historical financial statements, is
considered a charitable organization.
Fees for services rendered or that are
otherwise ineligible for deduction under
the Internal Revenue Code are not
considered tax deductible charitable
donations.
(6) An entity is ineligible if its lender
or any of the lender’s officers have an
ownership interest in the borrower or is

PO 00000

Frm 00010

Fmt 4703

Sfmt 4703

70091

an officer or director of the borrower
with management control or where the
borrower or any of its officers, directors,
stockholders, or other owners have more
than a five percent ownership interest in
the lender. Any of the lender’s directors,
stockholders, or other owners that are
officers, directors, stockholders, or other
owners of the borrower without
management control or ownership less
than five percent must be recused from
any decision-making process associated
with the guaranteed loan.
(7) An entity is ineligible if it is a
lending institution, investment
institution, or insurance company with
exception of a fund that invests
primarily in cooperatives and funds
utilized in New Markets Tax Credit
(NMTC) structures.
(d) Ineligible use of loan funds and
ineligible loan purposes include:
(1) Distribution or payment to an
individual or entity that will retain an
ownership interest in the borrower or
distribution or payment to a beneficiary
of the borrower. Distribution or payment
to a member of the immediate family of
an owner, partner, or stockholder will
not be permitted, except for a change in
ownership of the business where the
selling immediate family member does
not retain an ownership interest and the
Agency determines the price paid to be
reasonable. As this type of transaction is
not an arm’s length transaction,
reasonableness of the price paid will be
based upon an appraisal. In situations
where there is common ownership or an
otherwise closely related company is
being paid to do construction or
installation work for a borrower, only
documented costs associated with
construction or installation can be paid
with loan proceeds. Documented
construction or installation costs may
not include any profit or wages to a
related person, and all work must be
done at cost with no profit built into the
cost. This paragraph does not apply to
transfers of ownership for Employee
Stock Ownership Plans (ESOPs) or
worker cooperatives; cooperatives
where the cooperative pays the member
for product or services; or where
member stock is transferred among
members of the cooperative.
(2) Guaranteeing lease payments or
any lines of credit.
(3) Guaranteeing loans made by other
Federal agencies.
(4) Loans on which the interest is
excludable from income under current
or a successor statute of the Internal
Revenue Code. Funds generated through
the issuance of tax-exempt obligations
shall neither be used to purchase the
guaranteed portion of any Agency
guaranteed loan nor shall an Agency

E:\FR\FM\09DEN1.SGM

09DEN1

khammond on DSKJM1Z7X2PROD with NOTICES

70092

Federal Register / Vol. 86, No. 234 / Thursday, December 9, 2021 / Notices

guaranteed loan serve as collateral for a
tax-exempt issue. The Agency may
guarantee a loan for a project that
involves tax-exempt financing only
when the guaranteed loan funds are
used to finance a part of the project that
is separate and distinct from the part
that is financed by the tax-exempt
obligation, and the guaranteed loan has
at least a parity security position with
the tax-exempt obligation.
(5) Guarantees supporting inherently
religious activities, such as worship,
religious instruction, proselytization, or
to pay costs associated with acquisition,
construction, or rehabilitation of
structures for inherently religious
activities, including the financing of
multi-purpose facilities where religious
activities will be among the activities
conducted.
(6) Research and development
projects and projects that involve
technology that is not commercially
available.
(7) Other than cooperative stock
purchase loans and cooperative equity
security guarantees, guarantees
supporting speculation, arbitrage, or
speculative real estate investment.
(8) Any business located within the
Coastal Barriers Resource System that
does not qualify for an exception as
defined in section 6 of the Coastal
Barriers Resource Act, 16 U.S.C. 3501 et
seq.
(9) Any business located in a special
flood or mudslide hazard area as
designated by the Federal Emergency
Management Agency in a community
that is not participating in the National
Flood Insurance Program unless the
project is an integral part of a
community’s flood control plan.
(10) Any project that drains, dredges,
fills, levels, or otherwise manipulates a
wetland or engages in any activity that
results in impairing or reducing the
flow, circulation, or reach of water,
except in the case of activity related to
the maintenance of previously
converted wetlands. This does not apply
to loans for utility lines.
(11) Facilities exempt from Federal
inspection in accordance with 9 CFR
303.1(a), specifically Federal Meat
Inspection Act custom-exempt facilities.
However, these facilities could apply as
a new or expanded business seeking to
expand their operations to obtain a
Federal or equivalent seal of inspection.
(12) Any project involving alcoholic
beverages, tobacco, or dietary
supplements.
(13) Projects or uses of loan funds that
the Agency determines create, directly
or indirectly, a conflict of interest.
(e) Fees and Charges.

VerDate Sep<11>2014

17:41 Dec 08, 2021

Jkt 256001

(1) Routine lender fees. The lender
may establish charges and fees for the
loan provided they are similar to those
normally charged other applicants for
the same type of loan in the ordinary
course of business, and these fees are an
eligible use of loan proceeds. The lender
must document such routine fees on an
Agency approved application form. The
lender may charge prepayment penalties
and late payment fees that are stipulated
in the loan documents, as long as they
are reasonable and customary; however,
the loan note guarantee will not cover
either prepayment penalties or late
payment fees.
(2) Professional services. Professional
services are those rendered by persons
generally licensed or certified by States
or accreditation associations, such as
architects, engineers, accountants,
attorneys, or appraisers, and those
rendered by loan packagers. The
borrower may pay fees for professional
services needed for planning and
developing a project. Such fees are an
eligible use of loan proceeds provided
that the Agency agrees that the amounts
are reasonable and customary. The
lender must document these fees on the
Agency approved application form.
(f) Interest rates.
(1) The interest rate for the guaranteed
loan will be negotiated between the
lender and the borrower and may be
either fixed or variable, or a
combination thereof, as long as it is a
legal rate. Interest rates will not be more
than those rates customarily charged
borrowers for loans without guarantees
and are subject to Agency review and
approval.
(2) A variable interest rate must be a
rate that is tied to a published base rate,
published in a national or regional
financial publication, agreed to by the
lender and the Agency. The variable
interest rate must be specified in the
promissory note and may be adjusted at
different intervals during the term of the
loan, but the adjustments may not be
more often than quarterly. The lender
must incorporate, within the variable
rate promissory note at loan closing, the
provision for adjustment of payment
installments. The lender must fully
amortize the outstanding principal
balance within the prescribed loan
maturity to eliminate the possibility of
a balloon payment at the end of the
loan.
(3) It is permissible to have different
interest rates on the guaranteed and
unguaranteed portions of the loan.
(4) Any change in the base rate or
fixed interest rate between issuance of
the conditional commitment and loan
closing must be approved in writing by
the Agency. Approval of such change

PO 00000

Frm 00011

Fmt 4703

Sfmt 4703

must be shown as an amendment to the
conditional commitment in accordance
with this notice and must be reflected
on the Guaranteed Loan Closing Report.
(5) The lender’s promissory note must
not contain provisions for default or
penalty interest nor will default or
penalty interest, interest on interest, or
late payment fees or charges be paid
under the Loan Note Guarantee.
(g) Loan terms.
(1) Term length. The lender, with
Agency concurrence, will establish and
justify the guaranteed loan term based
on the use of guaranteed loan funds, the
useful economic life of the assets being
financed and those used as collateral,
and the borrower’s repayment ability.
The maximum term allowable for final
guaranteed loan maturity is limited to
the justified useful life of the project or
assets used as collateral but may not
exceed 40 years or limitations in the
applicable State statute, whichever is
less. State statutory limits on maximum
terms do not apply for projects on land
under the jurisdiction of federally
recognized Tribes.
(2) Guaranteed loan schedule and
repayment. The lender must structure
repayment in consideration of the
borrower’s cash flow and in accordance
with the provisions of this section and
the loan agreement. Scheduled
guaranteed loan payments shall be made
no less frequently than annually. In
addition:
(i) Both the guaranteed and
unguaranteed portions of the loan must
be amortized over the same term.
(ii) Guaranteed loans must require a
periodic payment schedule that will
retire the debt over the term of the loan
without a balloon payment.
(3) Interest only. If the promissory
note provides for an interest-only
period, interest must be paid at least
annually starting on a date that is no
more than one year from the date of the
promissory note. The first payment of
principal and interest will be scheduled
based on the borrower’s cash flow and
whether the facility is operational and
generating adequate income. However,
the first principal and interest payment
must be scheduled not more than three
years after the date of the promissory
note and principal and interest
payments must be scheduled for
repayment at least annually thereafter.
(4) Due on demand. There must be no
‘‘due-on-demand’’ clauses without
cause. Regardless of any ‘‘due-ondemand’’ with cause provision in a
lender’s promissory note, the Agency
must concur in any acceleration of the
guaranteed loan unless the basis for
acceleration is monetary default.

E:\FR\FM\09DEN1.SGM

09DEN1

70093

Federal Register / Vol. 86, No. 234 / Thursday, December 9, 2021 / Notices
maximum debt-to-balance sheet equity
ratio of 9 to 1 at loan closing; or
(ii) Borrower investment of equity or
other funds (including grants or
subordinated debt when subject to a
standstill agreement for the life of the
loan) into the project in an amount of 10
percent or more of total eligible project
cost.
(3) New businesses with a project
involving construction and when the
lender will request the loan note
guarantee prior to completion of
construction must meet one of the
following requirements:
(i) A minimum of 25 percent balance
sheet equity (including subordinated
debt when subject to a standstill
agreement for the life of the loan), or a
maximum debt-to-equity ratio of 3 to 1,
at guaranteed loan closing; or
(ii) Borrower investment of equity or
other funds (including grants or
subordinated debt when subject to a
standstill agreement for the life of the
loan) into the project in an amount of 25
percent or more of total eligible project
cost.
(4) All other borrowers that are new
businesses must meet one of the
following requirements:
(i) A minimum of 20 percent balance
sheet equity (including subordinated
debt when subject to a standstill
agreement for the life of the loan), or a
maximum debt-to-equity ratio of 4 to 1,
at guaranteed loan closing; or
(ii) Borrower investment of equity or
other funds (including grants or
subordinated debt when subject to a
standstill agreement for the life of the
loan) into the project in an amount of 25
percent or more of total eligible project
cost.
(5) Capital and equity requirements
may be increased or reduced by the
Agency as follows:
(i) Increases.
(A) The Agency may increase the
capital or equity requirement specified
under paragraphs (h)(1) through (4) of
this section for guaranteed loans the
Agency determines carry a higher risk.

(h) Capital and equity. Borrowers are
required to have sufficient capital or
equity to mitigate the ongoing financial
and operational risks of the business.
Balance sheet equity will be determined
based upon current and projected
borrower financial statements. Current
and projected financial statements filed
with the application are reviewed to
determine if it is likely that the balance
sheet equity requirement can be met.
The following capital and equity
requirements must be met at the time of
lender’s closing of the guaranteed loan.
A balance sheet as of loan closing is
required and should reflect the new
debt and use of proceeds. If there are
multiple borrowers, consolidated
financial statements should be
submitted.
(1) Existing businesses must meet one
of the following requirements:
(i) A minimum of 10 percent balance
sheet equity (including subordinated
debt when subject to a standstill
agreement for the life of the loan), or a
maximum debt-to-balance sheet equity
ratio of 9 to 1, at loan closing;
(ii) Provide 10 percent or more of total
eligible project costs in the form of
borrower investment of equity or other
funds into the project including grants
or subordinated debt when subject to a
standstill agreement for the life of the
loan; or
(iii) Balance sheet equity includes
owner-contributed capital of 10 percent
or more of total fixed assets (net total
fixed assets plus depreciation).
(2) New businesses with sales
contract(s) with proceeds in an amount
adequate to meet debt service and the
term of the sales contract(s) are at least
equal to the term of the guaranteed loan,
and subject to Agency acceptance of the
credit worthiness of the counterparty
(entity the borrower is contracting with),
the borrower must meet one of the
following requirements:
(i) A minimum of 10 percent balance
sheet equity (including subordinated
debt when subject to a standstill
agreement for the life of the loan), or a

In determining whether a project or
guaranteed loan carries a higher risk, the
Agency will consider the current status
of the industry, concentration of the
industry in the Agency’s portfolio,
collateral coverage, value of personal or
corporate guarantees, cash flow, and
contractual relationships with suppliers
and buyers; credit rating of the
borrower; and the strength of the
feasibility study and experience of
management. The Agency may also
increase the capital or equity
requirement for new businesses
producing new products to sell into new
and emerging markets.
(B) The Agency will increase the
capital or equity requirement specified
under paragraphs (h)(1) through (4) of
this section for all guaranteed loans in
excess of $25 million.
(ii) Reductions. The Agency may
reduce the minimum equity
requirement for an existing business
when personal or corporate guarantees
are obtained in form and substance
satisfactory to the Agency, and all pro
forma statements indicate the business
to be financed meets or exceeds the
median quartile (as identified in the
Risk Management Association’s Annual
Statement Studies or similar
publication) for the current ratio, quick
ratio, debt-to-worth ratio, and debt
service coverage ratio.
(6) The lender must certify that, as of
the date the guaranteed loan was closed,
its credit analysis indicated that the
borrower had sufficient capital or equity
to mitigate the financial and operational
risks of the business, and that the
borrower met the minimum equity
required by the Agency in its
conditional commitment, or that the
minimum borrower capital contribution
toward project costs, as applicable and
required by the Agency, was met. A
copy of the borrower’s loan closing
balance sheet must be included with the
lender’s certification.

CAPITAL EQUITY REQUIREMENTS SUMMARY
Borrower must meet one of the following at the time of the
closing of the guaranteed loan:
Borrower

khammond on DSKJM1Z7X2PROD with NOTICES

Percent balance
sheet equity:

Existing Business ........................................................................................................................................
Borrowers that are new businesses with sales contract(s) adequate to meet debt service and the term
of the sales contract(s) are at least equal to the term of the guaranteed loan ......................................
Borrowers that are new businesses for a project involving construction and the lender will request the
loan note guarantee prior to completion of construction ........................................................................
All other borrowers that are new businesses .............................................................................................

VerDate Sep<11>2014

17:41 Dec 08, 2021

Jkt 256001

PO 00000

Frm 00012

Fmt 4703

Sfmt 4703

E:\FR\FM\09DEN1.SGM

Balance sheet
equity includes
owner contributed
capital as
percentage of total
fixed assets:

Borrower
investment as
percent of total
eligible project
cost:

≥10

≥10

≥10

≥10

≥10

N/A

≥25
≥20

≥25
≥25

N/A
N/A

09DEN1

khammond on DSKJM1Z7X2PROD with NOTICES

70094

Federal Register / Vol. 86, No. 234 / Thursday, December 9, 2021 / Notices

(i) Personal, partnership, and
corporate guarantees. The provisions of
this section do not apply to passive
investors.
(1) Except as provided in paragraph
(3) of this section, Agency-approved,
unsecured personal, partnership, and
corporate guarantees for the full term of
the guaranteed loan and at least equal to
the guarantor’s percent interest or
membership in the borrower times the
guaranteed loan amount are required
from any person or entity owning a 20percent or greater interest or
membership in the borrower. In the
event a portion of the borrower’s
ownership interest stock is sold or
transferred, the Agency reserves the
right to require personal or corporate
guarantees from the new owners of a 20percent or more interest in the borrower.
(2) When warranted by an Agency
assessment of potential financial risk,
the Agency may require the following:
(i) Guarantees to be secured;
(ii) Guarantees from any person or
entity owning less than a 20 percent
interest or membership in the borrower;
and
(iii) Guarantees from persons whose
ownership interest in the borrower is
held indirectly through intermediate or
affiliated entities.
(3) Exceptions to the requirement for
personal, partnership or corporate
guarantees may be requested by the
lender. The lender must document, to
the Agency’s satisfaction, that collateral,
equity, cash flow, and profitability
indicate an above-average ability of the
borrower to repay the loan. The Agency
will evaluate these requests on a caseby-case basis.
(4) Each guarantor must execute an
Agency-approved guarantee form in
addition to any guarantee form required
by the lender.
(5) Any amounts paid by the Agency
pursuant to a claim by a guaranteed
program lender will constitute a Federal
debt owed to the Agency by a guarantor
of the loan, to the extent of the amount
of the guarantor’s guarantee.
(j) Insurance. The lender is
responsible for ensuring that the
following required insurance is
maintained by the borrower.
(1) Hazard. Hazard insurance with a
standard clause naming the lender as
mortgagee or loss payee, as applicable,
is required for the life of the guaranteed
loan. The amount must be at least equal
to the replacement value of the
collateral or the outstanding balance of
the loan, whichever is the greater
amount.
(2) Life. The lender may require a
collateral assignment of life insurance to
insure against the risk of death of

VerDate Sep<11>2014

17:41 Dec 08, 2021

Jkt 256001

persons critical to the success of the
business. When required, coverage must
be in amounts necessary to provide for
management succession or to protect the
business. The Agency may require life
insurance on key individuals for loans
where the lender has not otherwise
proposed such coverage. The cost of
insurance and its effect on the
applicant’s working capital must be
considered, as well as the amount of
existing insurance that could be
assigned without requiring additional
expense.
(3) Worker compensation. Worker
compensation insurance is required in
accordance with State or Tribal law.
(4) Flood. National flood insurance is
required in accordance with applicable
law.
(5) Other. The lender must consider
whether public liability, business
interruption, malpractice, and other
insurance is appropriate to the
borrower’s particular business and
circumstances and must require the
borrower to obtain such insurance as is
necessary to protect the interests of the
borrower, the lender, and the Agency.
(k) Financial statements.
Except for audited financial
statements, the lender will determine
the type and frequency of submission of
financial statements by the borrower
and any guarantors. All financial
information (e.g., financial statements,
balance sheets, financial projections,
and income statements) must be
prepared and submitted in accordance
with accounting practices acceptable to
the Agency. Such practices can include,
but are not limited to, GAAP and the
industry’s standard accounting practice.
The Agency may require annual audited
financial statements. Audits will be
required of any public body, nonprofit
corporation, or Indian Tribe that
receives a guaranteed loan that meets
the thresholds established by 2 CFR part
200, subpart F. Any audit provided by
a public body, nonprofit corporation, or
Indian Tribe required by this paragraph
will be considered adequate to meet the
audit requirements of the FSC program
for that year.
(l) Cooperative stock/cooperative
equity. The cooperative or business
entity assisted must be an eligible
borrower under this notice and the
funds must be used for eligible uses of
loan funds under this notice.
(1) Cooperative stock purchase
program.
(i) The Agency may guarantee loans
for the purchase of cooperative stock by
individual farmers or ranchers in a
farmer or rancher cooperative
established for the purpose of
processing an agricultural commodity.

PO 00000

Frm 00013

Fmt 4703

Sfmt 4703

The cooperative must use the proceeds
from the stock sale for eligible uses of
loan funds described in Eligible Uses of
Funds section, above. The cooperative
may contract for services to process
agricultural commodities or otherwise
process value-added agricultural
products during the 5-year period
beginning on the operation startup date
of the cooperative in order to provide
adequate time for the planning and
construction of the processing facility of
the cooperative. The full amount of the
loan proceeds must be used for the
purchase of cooperative stock and
cooperative must not reinvest those
funds into another entity. The Agency
may also guarantee loans for the
purchase of transferable stock shares of
any type of cooperative. Such stock may
provide delivery or some form of
participation rights and may only be
traded among cooperative members.
(ii) The maximum term allowable for
a guaranteed loan’s maturity is limited
to the justified useful life of the funded
project assets the cooperative purchases
with the proceeds of the stock sale not
to exceed 40 years or applicable State
statutory limitations, whichever is less.
The maximum term is seven years if the
proceeds from the stock sale are used by
the cooperative for working capital.
(iii) The lender will, at a minimum,
obtain a valid lien on the stock, an
assignment of any patronage refund, and
the ability to transfer the stock to
another party, or otherwise liquidate
and dispose of the collateral in the event
of a borrower default.
(iv) The lender must complete a
written credit analysis of the borrower
of each stock purchase loan and a
complete credit analysis of the
cooperative prior to making its first
stock purchase loan.
(v) If the borrower is an agricultural
producer, the borrower may provide
financial information in the manner that
is generally required by commercial
agricultural lenders.
(vi) The required feasibility study
should address the cooperative.
(vii) The Agency will conduct an
appropriate environmental assessment
on the processing facility and will not
process individual applications for the
purchase of stock until the
environmental assessment on the
cooperative processing facility is
completed. Typically, an individual
loan for the purchase of cooperative
stock is considered a categorical
exclusion.
(2) Cooperative equity security
guarantees.
(i) The Agency may guarantee loans
for the purchase of preferred stock or
similar equity issued by a cooperative

E:\FR\FM\09DEN1.SGM

09DEN1

khammond on DSKJM1Z7X2PROD with NOTICES

Federal Register / Vol. 86, No. 234 / Thursday, December 9, 2021 / Notices
and may guarantee loans to a fund that
invests primarily in cooperatives. In
either case, the guarantee must
significantly benefit one or more entities
eligible for assistance under this notice.
(ii) ‘‘Similar equity’’ is any special
class of equity stock that is available for
purchase by non-members and/or
members and lacks voting and other
governance rights.
(iii) A fund that invests ‘‘primarily’’ in
cooperatives is determined by its
percentage share of investments in and
loans to cooperatives. A fund portfolio
must have or commit at least 50 percent
of its loans and investments in
cooperatives to be considered eligible
for loan guarantees for the purchase of
preferred stock or similar equity.
(iv) The maximum term of a
guaranteed loan for preferred stock or
similar equity is equal to the least of the
following, but will not exceed 40 years:
(A) The justified useful life of the
funded project assets;
(B) The maximum term under any
applicable State statute;
(C) The specified holding period for
redemption as stated by the stock
offering; or,
(D) Seven years when the proceeds
are used by the cooperative for working
capital.
(v) All borrowers purchasing
preferred stock or similar equity must
provide documentation of the terms of
the offering that includes compliance
with State and Federal securities laws
and financial information about the
issuer of the preferred stock to both the
lender and the Agency.
(vi) An issuer of preferred stock must
be a cooperative organization or a fund
and must be able to issue preferred
stock to the public that, complies with
applicable State and Federal securities
laws.
(vii) A fund must use a guaranteed
loan under this subpart to, either or
both, make loans to cooperatives or to
purchase preferred stock that is issued
by cooperatives. The cooperative must
use the proceeds from the guaranteed
loan or stock sale for eligible uses of
loan funds described in the Eligible
Uses of Funds section, above.
(viii) The lender will, at a minimum,
obtain a valid lien on the preferred
stock, an assignment of any patronage
refund, and the ability to transfer the
stock to another party, or otherwise
liquidate and dispose of the collateral in
the event of a borrower default. When
recovering losses from loan defaults,
lenders may take ownership of all
equities purchased with such loans,
including additional shares derived
from reinvestment of dividends.

VerDate Sep<11>2014

17:41 Dec 08, 2021

Jkt 256001

(ix) Shares of preferred stock that are
purchased with guaranteed loan
proceeds cannot be converted to
common or voting stock.
(x) In the absence of adequate
provisions for investors’ rights to early
redemption of preferred stock or similar
equity, a borrower must request from a
cooperative or fund issuing such
equities a contingent waiver of the
holding or redemption period in
advance of share purchases. This
contingent waiver provides that in the
event a borrower defaults on a loan
financed under the guaranteed loan
program, the borrower waives any
ownership rights in the stock, and the
lender and Agency will then have the
right to redeem the stock.
(xi) Guaranteed loans for the purchase
of preferred stock must be prepaid in
the event a cooperative or fund that
issued the stock exercises an early
redemption. If the cooperative enters
into bankruptcy, to the extent the
cooperative can redeem the preferred
stock, the borrower is required to repay
the loan from the redemption of the
stock.
(3) Employee ownership succession.
(i) The Agency may guarantee loans
for conversions of businesses to either
cooperatives or ESOP within five years
from the date of initial transfer of stock.
(ii) The term of the loan shall not
exceed 10 years.
(iii) The lender will, at a minimum,
obtain a valid lien on the stock, an
assignment of any patronage refund, the
ability to transfer the stock to another
party, or the ability to otherwise
liquidate and dispose of the collateral in
the event of a borrower default. In the
event of default, the stock may not be
sufficient to satisfy the debt and the
borrower is fully liable for the entire
debt, regardless of the success or failure
of the cooperative or ESOP. The lender
must take all action to maximize
recovery on the loan, including
collection of personal and corporate
guarantees. In addition, provisions of
the Debt Collection Improvement Act of
1996 may impose significant restrictions
on delinquent Federal debtors,
including eligibility for other Federal
programs.
(iv) The lender must complete a
written credit analysis of each stock
purchase loan and a complete credit
analysis of the cooperative or ESOP
prior to making its first stock purchase
loan.
(v) If a cooperative is organized, a
selling owner becomes a member with
special control rights to protect their
stake in the business while a succession
plan is implemented. At the completion
of the stock transfer, selling owners may

PO 00000

Frm 00014

Fmt 4703

Sfmt 4703

70095

retain their membership in the
cooperative provided that their control
rights are the same as all other members.
Any special covenants that selling
owners may have held must be
extinguished upon completion of the
transfer.
(vi) If an ESOP is organized for
transferring ownership to employees,
selling owner(s) may not retain
ownership in the business after five
years from the date of the initial transfer
of stock.
(m) New Markets Tax Credit (NMTC)
program. The NMTC program is
administered by the U.S. Department of
the Treasury’s (Treasury) Community
Development Financial Institutions
(CDFI) Fund with NMTC credits
allocated to Treasury-certified
Community Development Entities
(CDEs) across the United States to make
Qualified Equity Investments (QEIs) in
low-income communities. NMTC
related definitions and terms in this
section are governed by section 45(D) of
the Internal Revenue Code (26 U.S.C.
45D), and applicable Treasury
regulations (26 CFR 1.45D–1). A CDE
will generally establish a new
subsidiary of a CDE (sub-CDE) for
individual NMTC projects. Lenders and
their borrowers with guaranteed loan
projects that include NMTC investments
must comply with the provisions in this
section. To be a lender for a guaranteed
loan project that involves financing
under the NMTC provisions, the lending
entity must meet the applicable
eligibility criteria in § 5001.130. The
Agency will not waive its servicing
rights to a guaranteed loan or be a party
to any forbearance agreement in
conjunction with a NMTC project.
(1) Guaranteed loans directly to
Qualified Active Low-Income
Community Businesses (QALICB).
(i) A lender that is CDE or sub-CDE
under the direct control of a regulated
lender or an approved non-regulated
lender does not need to separately meet
the requirements of an eligible lender
under this notice to make a guaranteed
loan directly to a QALICB.
(ii) Subject to the provisions in
Section C.(m)(1)(iii) of this notice, a
lender that is a CDE or sub-CDE may
have an ownership interest in the
borrower provided that each condition
specified in paragraphs (A) through (C)
below is met.
(A) The lender does not have an
ownership interest in the borrower prior
to the application.
(B) The lender does not take a
controlling interest in the borrower.
(C) The lender does not provide
equity or take an ownership interest in
a borrower at a level that would result

E:\FR\FM\09DEN1.SGM

09DEN1

khammond on DSKJM1Z7X2PROD with NOTICES

70096

Federal Register / Vol. 86, No. 234 / Thursday, December 9, 2021 / Notices

in the lender owning 20 percent or more
interest in the borrower.
(iii) Notwithstanding the provisions
in Section C.(d)(13) of this notice a
lender that is a CDE or sub-CDE taking
an ownership interest in the borrower
does not constitute a conflict of interest.
The Agency will mitigate the potential
for a conflict of interest by requiring
appropriate loan covenants establishing,
at a minimum, limitations on dividends
and distributions of earnings in the loan
agreement between the lender and
borrower. The Agency will also ensure
that the lender limits any waivers of
loan covenants and future modifications
of loan documents in compliance with
this part.
(iv) Guaranteed loans made by a
lender directly to a QALICB must meet
all other program and project eligibility
requirements as specified in this notice.
(v) For purposes of calculating
borrower equity, the CDE’s (or subCDE’s) amount of the principal balance
of the loan from NMTC investor funds
that is subordinated to the guaranteed
loan may be considered as equity.
(2) Guaranteed loans to a NMTC
leveraged equity structure. Tax benefits
to a NMTC investor are based on the
total amount of funds utilized in the
project. The tax benefit calculation
includes the sum of the investor’s cash
investment plus loan proceeds from a
leveraged lender into a NMTC investor
fund entity. The investor fund entity is
generally a new entity established to
make a QEI into one or more CDEs or
sub-CDEs to support a qualified lowincome community investment (QLICI)
to a QALICB. The investor fund entity,
through its investment, has ownership
rights in the sub-CDE that will be
making secured QLICI loans to the
QALICB. Notwithstanding the
provisions above in section C.(a),
Eligible Borrowers, either a leveraged
lender entity lending to an investor fund
entity, or an investor fund entity such
as an investor partnership or investor
limited liability corporation, may be an
eligible borrower for a specific NMTC
project as specified in paragraph (2)(i) of
this section. For purposes of this section
only, the stated term ‘‘borrower’’ in
paragraphs (2)(i) through (xiii) of this
section applies to both a leveraged
lender entity and an investor fund entity
as the guaranteed loan borrower in the
NMTC project. Paragraphs (2)(ii)
through (xiii) of this section identify
modifications to this part that apply
when the eligible borrower is a
leveraged lender entity or investor fund
entity in a NMTC project.
(i) To be an eligible borrower using
the leveraged equity structure of a
NMTC project each condition identified

VerDate Sep<11>2014

17:41 Dec 08, 2021

Jkt 256001

in paragraphs (2)(i)(A) through (E) of
this section must be met.
(A) The investor fund entity must be
established for a single specific NMTC
investment.
(B) The lender is not an affiliate of the
borrower.
(C) When the borrower is a leveraged
lender entity it must relend one
hundred percent of the guaranteed loan
funds to an investor fund entity. In all
cases, one hundred percent of the
guaranteed loan funds are or will be
invested by the investment fund entity
in one or more sub-CDEs that will then
be loaned directly to a QALICB through
a direct tracing method, and such
guaranteed loan funds are, or will be,
used by the QALICB in accordance with
the eligibility requirements in this
Notice. The QALICB’s project must be
the ultimate use of one hundred percent
of the guaranteed loan funds.
(D) The QALICB must meet the
requirements of an eligible borrower
under this notice.
(E) The sub-CDE operating agreement
with the QALICB must include a
provision that the guaranteed lender has
approval rights with respect to any
substantial loan servicing actions that
may be taken by the sub-CDE regarding
the collateral or repayment terms of
their QLICI loans to the QALICB.
(ii) The guaranteed loan amount and
percentage of guarantee provisions
found in the Loan Guarantee Limits
section of this notice, apply to the
QALICB and to the investor fund entity
or leveraged lender entity, who would
actually be the borrower as defined
under this part.
(iii) For purposes of calculating
borrower equity in compliance with this
notice, the leveraged lender entity’s note
from the investor fund may be
considered a tangible asset and when
the lien associated with the sub-CDE’s
loan is subordinated, the principal
balance of the sub-CDE’s loan made to
the QALICB from NMTC investor funds
may be considered as equity.
(iv) The loan terms of this notice
apply to both the borrower and the
QALICB. The maturity and related
payment schedule of the lender’s
guaranteed loan to the borrower must be
no longer than the maturity and related
payment schedule of the sub-CDE’s loan
to the QALICB. An Agency approved
unequal or escalating schedule of
principal and interest payments can be
used for a NMTC loan. The lender may
require additional principal repayment
by a co-borrower, such as an owner or
principal participant of the QALICB.
Notwithstanding the provisions in
Section C.(g)(3), the Agency may
consider interest-only payments by a

PO 00000

Frm 00015

Fmt 4703

Sfmt 4703

borrower pursuant to an interest-only
term not to exceed seven years on a loan
made under an NMTC structure if the
lender requires:
(A) A debt repayment reserve fund or
sinking fund in an amount at least equal
to the guaranteed loan’s principal
amortization that would have otherwise
applied to the loan if equally amortized
payments were collected during the
seven-year term; and
(B) Such reserve funds or sinking
funds are applied to the guaranteed loan
as an additional payment of principal at
the end of such interest-only term.
(v) The credit factors of this notice
apply to both the lender’s guaranteed
loan to the borrower and the sub-CDE’s
loan to the QALICB. The collateral
provisions of this notice apply only to
the sub-CDE’s loan to the QALICB.
(vi) The personal, partnership and
corporate guarantee provisions of this
notice apply when the guaranteed loan
borrower is a leveraged lender entity in
an NMTC project. Guaranteed loans
made directly to an investor fund entity
as the borrower do not require a
personal, partnership, or corporate
guarantee from the investor fund
entity’s owner, who is the NMTC tax
credit investor and considered a passive
investor. The Agency shall obtain the
personal, partnership or corporate
guarantee from the QALICB ownership
for a guaranteed loan to an investor fund
entity, subject to the eligibility
requirements of the NMTC program.
The Agency may require additional
personal, partnership or corporate
guarantees if warranted by an Agency
evaluation of potential financial risk.
(vii) The insurance provisions of this
notice apply only to the QALICB and
the sub-CDE’s secured loan to the
QALICB.
(viii) The financial reporting
provisions of this notice apply to both
the borrower and the QALICB.
(ix) The application requirements of
this notice, as applicable, apply to both
the borrower and the QALICB,
including the application analysis and
evaluation components. The Agency
also requires submission of the loan
terms and documents between the subCDE and QALICB. As part of the
application completed by the lender, the
documentation must include
comparable industry information and a
summary of the NMTC project’s funding
path and an explanation of the
relationships between all parties in the
NMTC transaction (an accompanying
schematic is encouraged for
complicated transactions).
(x) The environmental responsibilities
specified in this notice apply to the
NMTC project.

E:\FR\FM\09DEN1.SGM

09DEN1

Federal Register / Vol. 86, No. 234 / Thursday, December 9, 2021 / Notices

khammond on DSKJM1Z7X2PROD with NOTICES

(xi) For any application that the
Agency assigns a priority score, when
assigning the priority score to a NMTC
loan application, the Agency will score
the project based on the entire NMTC
structure and the QALICB’s project as
the ultimate use of guaranteed loan
funds.
(xii) The lender is responsible for
ensuring that the NMTC project
complies with the planning, performing,
development and project monitoring
provisions of this notice and the lender
is also responsible for ensuring the
NMTC project complies with all
applicable Treasury NMTC
requirements.
(xiii) The interest rate and loan term
provisions of this notice apply to both
the borrower and the QALICB in a
NMTC transaction.
D. Application and Submission
Information
(a) Address to Request Application
Package.
(1) Lenders should download the
application documents and
requirements delineated in this notice
from: https://www.rd.usda.gov/
foodsupplychainloans.
(2) Applications will only be accepted
electronically as provided at https://
www.rd.usda.gov/
foodsupplychainloans. Lenders may use
an existing Unique Entity Identifier
(UEI) (obtained at https://sam.gov/) and
eAuthentication Customer Account to
file an application. To apply
electronically:
(i) Obtain and register for a UEI at
https://sam.gov/ as described in Section
H.(e)(2) of this notice;
(ii) Create a Level 2 USDA
eAuthentication Customer Account at
https://www.eauth.usda.gov/eauth/b/
usda/home; and,
(iii) Request access to apply
electronically by emailing a written
request with a complete Account and
User Creation form (available at https://
www.rd.usda.gov/
foodsupplychainloans) to
[email protected].
(3) An autoreply email message will
acknowledge receipt of your request.
Please allow at least two business days
for its processing. If you do not receive
an email message within that timeframe,
please check your Spam folder;
(4) Upon approval, a lender’s
authorized/rightful users will each
receive an email from
[email protected], with
instructions to access the system.
(b) Content and Form of Application
Submission.
The lender may complete either a
request for preliminary eligibility

VerDate Sep<11>2014

17:41 Dec 08, 2021

Jkt 256001

review or a full application to begin the
process for obtaining a guaranteed loan.
The Agency encourages, but does not
require, lenders to file requests for
preliminary eligibility reviews in order
to obtain Agency comments before
submitting a full application.
(1) Preliminary eligibility review.
(i) Contents. Except as otherwise
indicated, each request for a preliminary
eligibility review must contain the
material identified in paragraphs (A)
and (B) of this section. This information
may be submitted in a narrative format
or utilizing the lender’s preliminary
lender’s analysis or preliminary credit
memo. The borrower’s executive
summary and feasibility study should
be included for a full application under
this notice.
The lender will initiate the
environmental review process early in
the planning stage and should be alert
for projects that may have a significant
impact on the environment.
(A) Regardless of format, the lenders
must provide the following information:
(1) Name of the proposed borrower
and co-borrower(s) as applicable,
organization type, address, contact
person, email address, and telephone
number and whether the proposed
borrower or co-borrower is a member of
a socially disadvantaged group;
(2) Name of the proposed lender,
address, telephone number, contact
person, email address;
(3) Amount of the guaranteed loan
request, the percentage of guarantee
requested (if known), the proposed rates
and terms of the guaranteed loan, and
the source(s) of other funding;
(4) If known, a description of
collateral to be offered with estimated
value(s), identity of guarantors, and the
amount and source of equity, other
capital, and matching funds to be
contributed to the project; and
(5) A brief description of the project,
its location, products, or services
provided, service area, and, as
applicable, availability of raw materials
and supplies, including an explanation
of the impact the project will have on
increasing capacity and helping create a
more resilient, diverse, and secure U.S.
food supply chain.
(B) Sufficient information and
documentation to enable the Agency to
assess borrower, lender, and project
eligibility, including summaries or
spreadsheets of financial statements or
audits, relationships and identity of any
affiliates; copies of organizational
documents and organizational charts;
and existing debt instruments.
(ii) Assessment. Based on the
information submitted for the
preliminary eligibility review, the

PO 00000

Frm 00016

Fmt 4703

Sfmt 4703

70097

Agency will make an informal
assessment of the types of guarantee
funding applicable to the request, and
the eligibility of the borrower, project,
and lender. The Agency will provide
written informal comments. The
assessment may change based on
subsequently submitted information, is
solely advisory in nature, does not
obligate the Agency to approve a
guarantee request, and is not considered
a favorable or adverse decision by the
Agency.
(2) Full Applications.
The Agency will accept applications
on a continuous basis. For each loan
guarantee request, the lender must
submit to the Agency a complete
application as specified in paragraphs
(i) through (xv) of this section. Lenders
must submit complete applications in
order to be considered for loan
guarantees. Lenders are encouraged to
submit a complete application in a
single package; however, the Agency
may accept the environmental
information required by the Agency and
initiate and complete its environmental
reviews in advance of receiving a
complete application. Materials and
information submitted for a preliminary
eligibility review do not need to be
resubmitted, however, any such
materials and information that have
been revised or updated must be
resubmitted in full. If an application is
incomplete, the Agency will notify the
lender in writing of the items necessary
to address the incomplete application.
Upon receipt of a complete application,
the Agency will complete its evaluation.
(i) Agency-approved application form.
(ii) Credit evaluation, conforming to
Lender’s Credit Evaluation at Section
D.(c) of this notice.
(iii) Environmental information
required by the Agency in accordance
with 7 CFR 1970, ‘‘Environmental
Policies and Procedures,’’ to conduct its
environmental reviews.
(iv) Financial statements.
(A) Current Agency-acceptable
balance sheet and year-to-date income
statements of the borrower, affiliated
entities with business relationships, and
any guarantor(s) dated within 90 days of
submission of the complete application.
(B) Agency-acceptable historical
balance sheet, income statements, and
cash flow statements of the borrower for
the lesser of the last three fiscal years or
all years of operation; and
(C) Projected balance sheets, income
statements, and cash flow statements or
a financial model starting from the
current financial statements through a
minimum of two years of the project
performing at full operational capacity
or stable operations. Based on the type

E:\FR\FM\09DEN1.SGM

09DEN1

khammond on DSKJM1Z7X2PROD with NOTICES

70098

Federal Register / Vol. 86, No. 234 / Thursday, December 9, 2021 / Notices

of project or at the discretion of the
Agency, financial projections or models
may be required from current financial
statements up to the end of the term of
the guaranteed loan. Financial
projections must be supported by a list
of assumptions showing the basis for the
projections. Projected financial
statements must include a pro forma
balance sheet projected for guaranteed
loan closing.
(D) Operational cash flow projections
on a quarterly basis from the current
financial statements through start-up or
occupancy for projects involving
construction when lenders are
requesting the loan note guarantee prior
to completion of construction.
(E) The Agency may request
additional financial statements,
financial models, cash flow information,
updated financial statements, and other
related financial information to
determine the financial feasibility of a
project and evaluate the credit
underwriting of the borrower, its
affiliates, and any guarantors.
(v) Identify whether the borrower has
a known relationship or association
with an Agency employee. If there is a
known relationship, identify each
Agency employee with whom the
borrower has a known relationship.
(vi) Current credit reports or the
equivalent on the borrower, any
payment guarantors and any person or
entity owning greater than a 20 percent
or more interest in the borrower or
controls the borrower, except for passive
investors and those corporations listed
on a major stock exchange. A credit
report or its equivalent are not required
for elected and appointed officials when
the borrower is a public body, or Indian
Tribe, or for members of a non-profit
organization. Credit reports must be
submitted to the Agency for all
applications for guaranteed loans in the
amount of $200,000 or more. For
lenders that are submitting smaller
requests, the lender must keep the credit
report on file with the lender’s
application.
(vii) Executive Summary. The
executive summary must include a
description of the business and project;
the names of any corporate parent,
affiliates, and subsidiaries with a
description of the relationship;
description of how the project will
increase the capacity or make the food
supply chain more resilient, diverse, or
secure; and address how the borrower or
project, as applicable, meet the criteria
for priority scoring as described in
section E.(c)(4) of this notice.
(viii) Organizational documents.
(ix) For companies listed on a major
stock exchange or subject to the

VerDate Sep<11>2014

17:41 Dec 08, 2021

Jkt 256001

Securities and Exchange Commission
regulations, a copy of SEC Form 10–K,
‘‘Annual Report Pursuant to sections 13
or 15(d) of the Securities Exchange Act
of 1934.’’
(x) Intergovernmental consultation
comments in accordance with RD
Instruction 1970–I and 2 CFR part 415,
subpart C, or successor regulation,
unless exemptions have been granted by
the State single point of contact.
Applications from Federally recognized
Indian tribes are not subject to this
requirement.
(xi) Borrowers must provide evidence
of compliance with applicable
authorities. Borrowers engaged in
processing of meat, poultry, processed
egg products, and Siluriformes must
comply with the requirements of the
U.S. Department of Agriculture (USDA)
Food Safety and Inspection Service.
Borrowers engaged in processing of
other foods and food ingredients must
comply with the requirements of the
Food and Drug Administration. All
borrowers must also be in compliance
with requirements of state and local
governments.
(xii) At the time of the loan
application, the lender must submit its
loan classification and credit risk rating
classification scale.
(xiii) A feasibility study of the
proposed project, by a qualified
consultant, is required. At a minimum,
a feasibility study must include an
evaluation of the economic, market,
technical, financial, and management
feasibility and an executive summary
that reaches an overall conclusion as to
the business’ chance of success. The
feasibility study must consider the
borrower’s management experience;
sources of capital; products, services,
and pricing; marketing plan; proposed
use of loan funds; availability and
access to labor, raw materials including
animals and product, and supplies;
availability or access to necessary
infrastructure including water and
waste disposal; worker and food safety
plans; contracts in place; and
distribution channels. The feasibility
study should address and quantify how
the project will increase capacity or
make the food supply chain more
resilient, diverse, or secure. For
proposed financing activities involving
beef, pork, chicken, or turkey
processing, corroborate that the
borrower meets the borrower eligibility
provisions and self-certify that the
borrowers, their affiliated entities, and
entities providing processing services
through contractual, lease or service
agreements with the borrower, do not at
the time of application hold a market
share greater than or equal to the entity

PO 00000

Frm 00017

Fmt 4703

Sfmt 4703

that holds the fourth largest share of the
market for the species subject to the
proposed financing.
(xiv) Appraisals of collateral are
required as set forth in this section. The
lender is responsible for ensuring that
appraisal values adequately reflect the
actual value of the collateral based on
an arm’s length transaction. Completed
appraisals should be submitted when
the application is filed. If the appraisal
has not been completed when the
application is filed, the lender must
submit an estimated appraised value.
Prior to the issuance of the loan note
guarantee, the estimated value must be
supported with an appraisal acceptable
to the agency.
(A) Newly-acquired chattel. A bill of
sale may be submitted to support the
value of newly-acquired chattel.
(B) Existing chattel. The lender must
obtain appraisal(s) for existing chattel
collateral when its value exceeds
$250,000.
(C) Real estate. The lender must
obtain appraisals for real estate
collateral when the value of the
collateral exceeds $500,000 or the
current limitation established under the
Financial Institutions Reform, Recovery,
and Enforcement Act (FIRREA) Public
Law 101–73, 103 Stat. 183 (1989). Real
estate and chattels with a value below
these thresholds must be evaluated in
accordance with the lender’s primary
regulator’s policies relating to appraisals
and evaluations or, if the lender is not
regulated, in accordance with normal
banking practices and generally
accepted methods of determining value.
(D) Construction Project. For
construction projects, the lender must:
(1) Obtain the ‘‘As Is’’ market value
and the ‘‘prospective’’ market value as
of the date of construction completion
to determine the value of the real estate
property, or
(2) Obtain an income-based appraisal
as of the date of completion to
determine the value of revenues to be
generated by the real estate.
(E) Appraisal standards.
(1) Each real estate appraisal must be
conducted by an independent qualified
appraiser in accordance with the
Uniform Standards of Professional
Appraisal Practice (USPAP) or successor
standards. All real estate appraisals
must meet the requirements contained
in the FIRREA, and the appropriate
guidelines contained in Standards 1 and
2 of the USPAP and be performed by a
State Certified General Appraiser
licensed in the state in which the real
estate is located.
(2) Chattel appraisals must be
conducted by an independent qualified
appraiser and must be based on industry

E:\FR\FM\09DEN1.SGM

09DEN1

khammond on DSKJM1Z7X2PROD with NOTICES

Federal Register / Vol. 86, No. 234 / Thursday, December 9, 2021 / Notices
recognized standards and reflect the age,
condition, and remaining useful life of
the equipment.
(F) Interagency appraisal and
evaluations guidelines. Notwithstanding
any exemption that may exist for
transactions guaranteed by a Federal
Government agency, all appraisals
obtained by the lender under this part
must conform to the interagency
appraisal and evaluations guidelines
established by the lender’s primary
Federal or State regulator, if applicable.
(G) Environmental considerations.
When the Agency will take a lien on
real property, the real estate appraisals
must include consideration of the
potential effects from a release of
hazardous substances or petroleum
products or other environmental
hazards on the market value of the
collateral, as determined in accordance
with the appropriate American Society
for Testing and Materials (ASTM)
International Real Estate Assessment
and Management environmental
standards.
(H) Appraisal review report. The
lender must submit its complete
technical review of the appraisal in an
appraisal review report prepared in
compliance with USPAP Standards 3
and 4 to the Agency before guaranteed
loan closing.
(1) Appraisals must not be more than
one year old. However, the Agency may
request a more recent appraisal in order
to reflect more current market
conditions.
(2) The lender must provide
documentation demonstrating that, in
addition to the other requirements of
this section pertaining to appraisers, the
appraiser has the necessary experience
and competency to appraise collateral.
(I) Appraisal fees. Unless otherwise
stated in this part, appraisal fees or any
other associated costs will not be paid
by the Agency.
(xv) Any additional information
required by the Agency to complete its
evaluation.
(c) Lender’s Credit Evaluation
The lender is responsible for
originating a guaranteed loan in
accordance with the requirements of
this notice and in accordance with its
internal origination policies and
procedures to the extent they do not
conflict with the requirements of this
part. For each application, the lender
must prepare a credit evaluation that is
consistent with Agency standards found
in this notice. The Agency reserves the
right to review the lender’s credit
evaluation and request additional
information. Lender approval does not
constitute Agency approval.

VerDate Sep<11>2014

17:41 Dec 08, 2021

Jkt 256001

(1) Lender’s evaluation guidelines.
The lender must conduct a credit
evaluation using credit documentation
procedures and underwriting processes
that are consistent with generally
accepted prudent lending practices for
commercial, public and project
financing, and are also consistent with
the lender’s own policies, procedures,
and lending practices. The underwriting
process must include a review of each
loan for which a loan guarantee is being
sought under this notice. Applications
involving affiliated entities must
include a global credit evaluation and if
applicable a global historical and
projected debt service coverage analysis.
The analysis should evaluate the
relationships between all associated
parties to determine potential risks
which may affect the borrower and its
ability to repay the loan. Entities which
may have an impact on the borrower or
significantly contribute to the
repayment ability of the loan should
provide financials for global analysis.
Applications involving guarantor(s)
must also include a global debt service
coverage analysis of the guarantor(s)
including the cash flow of the
guarantor(s). In addition, the lender
must review all applicable contracts,
management agreements, and leases to
determine they will not adversely affect
either the borrower’s repayment ability
or the value of the collateral securing
the guaranteed loan. The lender’s
evaluation must address any financial or
other credit weaknesses of the borrower
and project and discuss risk mitigation
requirements imposed by the lender.
(2) Content. The credit evaluation
must be sufficiently detailed to describe
the proposed loan, business and project
structures and document that the
proposed loan is feasible. The credit
evaluation must include:
(i) A written evaluation of each credit
factor listed in paragraphs (3)(i) through
(v) of this section and any additional
factors as appropriate;
(ii) A written evaluation of the
feasibility study, executive summary,
technical report, and engineering and
architectural reports, as applicable;
(iii) Spreadsheets and analysis of the
financial statements provided in
accordance with the Application and
Submission Information, with
appropriate ratios and comparisons with
industry standards (such as Dun &
Bradstreet or the Risk Management
Association). The spreadsheets should
enable a reviewer to easily scan the
data, spot trends, and make
comparisons. The analysis should
include comments on the business’
performance trends comparison to the
industry averages and steps or proposals

PO 00000

Frm 00018

Fmt 4703

Sfmt 4703

70099

the borrower has taken to address any
financial or industry weakness;
(iv) Analysis of any financial
projections deviating from historical
financial performance and such
projections must be substantiated and
documented;
(v) Analysis of projected operational
cash flow on a quarterly basis for
borrowers with seasonal cyclical cash
flow; and
(vi) Analysis of operational cash flow
on a quarterly basis from the current
financial statements through start-up or
occupancy for projects involving
construction when lenders are
requesting the loan note guarantee be
issued prior to completion of
construction. The analysis should
address the borrower’s construction
schedule and address their projected
cash flow needs as the project is being
completed. The cash flow analysis must
indicate whether this cash flow is being
provided by the guaranteed loan,
borrower equity, or other sources.
(3) Credit factors. In performing its
credit evaluation, the lender must
analyze all credit factors associated with
each proposed guaranteed loan and
apply its professional judgment to
determine that the credit factors and
guaranteed loan terms and conditions,
considered in combination, ensure
guaranteed loan repayment. Credit
factors to be analyzed include, but are
not necessarily limited to, those areas
identified and defined in paragraphs
(3)(i) through (v) of this section.
(i) Character. Those qualities that
generally impel the borrower to meet its
obligations as demonstrated by its credit
history, including project and borrower
debt structure and debt repayment
ability. When applicable, an evaluation
may include the character of persons
with management control or a 20
percent or more ownership interest in
the borrower. When the borrower’s
credit history or character is negative,
the lender will provide the basis for the
resolution of any issue and why it is
unlikely to impact future financial
results. The ownership or membership
structure of the project and borrower
(including membership, sponsors, other
equity investors), and the historical
performance and experience of
ownership and management specific to
the project and industry. The historical
performance and experience of any
entities providing management or
administrative services pursuant to
contract should also be evaluated.
(ii) Capacity. A borrower’s ability to
produce sufficient cash to repay the
guaranteed loan as agreed, including the
feasibility and likelihood of the project
and borrower to produce sufficient

E:\FR\FM\09DEN1.SGM

09DEN1

khammond on DSKJM1Z7X2PROD with NOTICES

70100

Federal Register / Vol. 86, No. 234 / Thursday, December 9, 2021 / Notices

revenues to service the project’s debt
obligations over the life of the
guaranteed loan and, when applicable,
result in sufficient returns to investors
to ensure successful repayment of the
guaranteed loan. The lender shall
address any economic safeguards of the
project, including capital expenditure
budgeting or reserve funds and other
contingency reserve funds such as
maintenance reserve funds or debt
service reserve funds, intended to
protect and safeguard the Agency and
lender in the event of default. The
lender must make all efforts to:
(A) Ensure that the borrower has
adequate working capital, operating
capital and reserves for capital
expenditures, debt service, and
maintenance as applicable; and
(B) Structure or restructure debt so the
borrower has adequate debt coverage,
documenting as applicable the necessity
of any debt refinancing. The evaluation
will be supported by a cash flow
analysis.
(iii) Capital. The borrower must have
the resources to adequately capitalize
the project and demonstrate the ability
to generate and maintain sufficient cash
flow for its operations. The extent to
which project costs are funded by the
borrower in relation to project costs
funded by the guaranteed loan or other
Federal and non-Federal governmental
assistance such as grants, tax credits, or
other loans must be analyzed.
(iv) Collateral. This criterion refers to
the security pledged for the guaranteed
loan. The lender is responsible for
obtaining and maintaining proper and
adequate collateral for the guaranteed
loan. All collateral must secure the
entire guaranteed loan. The lender is
prohibited from taking separate
collateral for the guaranteed and
unguaranteed portions of the guaranteed
loan or requiring compensating balances
or certificates of deposit as a means of
eliminating the lender’s exposure on the
unguaranteed portion of the guaranteed
loan. Collateral can include but is not
limited to: General obligation bonds;
revenue bonds; pledges of taxes or
assessments; assignments of facility
revenue and byproduct revenue, as well
as other assets such as land, easements,
rights-of-way, water rights, buildings,
machinery, equipment, inventory; and
accounts receivable, other accounts,
contracts, cash, assignments of leases
and leasehold interests. Intangible assets
may serve as collateral, provided they
do not serve as primary collateral and
are no more than 25 percent of the
overall collateral package being pledged
as security for the guaranteed loan. For
purposes of determining compliance
with this requirement, leasehold

VerDate Sep<11>2014

17:41 Dec 08, 2021

Jkt 256001

improvements such as buildings and
other structures on leased property are
considered tangible assets and can serve
as primary collateral. It is the lender’s
responsibility to obtain, document, file,
record and take all actions necessary to
properly perfect and maintain adequate
collateral to protect the interests of the
lender and the Agency.
(A) The lender must determine the
market value of collateral as established
by an appraisal in accordance with
Section D.(b)(2)(xiv) of this notice.
(B) The lender should discount
collateral consistent with sound loan-todiscounted value practices which must
be adequate to secure the guaranteed
loan in accordance with this section. To
assess collateral adequacy and
appropriate levels of discounting, the
lender should consider the type, quality,
location, marketability, and alternative
uses of the collateral and the basis for
the valuation of the collateral, e.g.,
collateral valued on a cost or
replacement valuation, market or
comparable sales valuation may require
variance of discount factors. The lender
must provide satisfactory justification of
the discounts being used.
(v) Conditions. This factor refers to
the general business environment,
including the regulatory environment
affecting the business or industry, and
status of the borrower’s industry.
Consideration will be given to items
listed below and, when applicable, the
lender should submit supporting
documentation (e.g., feasibility study,
market study, preliminary architectural
or engineering reports, etc.):
(A) Availability and depth of resource
or feedstock market, strength and
duration of purchase agreements and
availability of substitutes;
(B) Analysis of current and future
market potential, off-take agreements,
competition, and type of project
(service, product, or commodity based);
(C) Energy infrastructure, availability
and dependability, transportation and
other infrastructure, and environmental
considerations;
(D) Technical feasibility including
demonstrated performance of the
technology and integrated processing
equipment and systems, system
performance guarantees by the
developer, and availability of
technology performance insurance;
(E) Complexity of construction and
completion, terms of construction
contracts and experience and financial
strength of the construction contractor
or engineering, procurement and
construction (EPC) contractor;
(F) Contracts and intellectual property
rights, licenses, permits, and state and
local regulations;

PO 00000

Frm 00019

Fmt 4703

Sfmt 4703

(G) Creditworthiness of any
counterparties, as applicable;
(H) Industry-related public policy
issues; and
(I) Other criteria that the lender or
Agency deems relevant to the project.
(d) Intergovernmental Review.
Executive Order (E.O.) 12372,
‘‘Intergovernmental Review of Federal
Programs,’’ applies to this program. This
E.O. requires that Federal agencies
provide opportunities for consultation
on proposed assistance with State and
local governments, including, a county,
municipality, town, township, village,
or other unit of general government,
including tribal governments, below the
State level. Many states have established
a Single Point of Contact (SPOC) to
facilitate this consultation. For a list of
States that maintain an SPOC, please see
the White House website: https://
www.whitehouse.gov/omb/
management/office-federal-financialmanagement/. If your State has an
SPOC, you may submit a copy of the
application directly for review. Any
comments obtained through the SPOC
must be provided as part of your
application. Applications from
Federally recognized Indian tribes are
not subject to this requirement.
E. Application Review Information
(a) General. The Agency will evaluate
all applications according to the
provisions of this part and may require
the lender to obtain additional
assistance in those areas where the
lender does not have the necessary
expertise to originate or service the
guaranteed loan.
(b) Evaluation and eligibility
determinations. The Agency will review
each complete application to make a
formal determination as to the eligibility
of the borrower, lender, project, and
guaranteed loan purpose and proposed
use of funds; whether there is a
reasonable assurance of repayment
ability; whether sufficient collateral and
equity exists; whether the proposed
guaranteed loan complies with all
applicable statutes and regulations; and
whether the environmental review is
complete.
(1) If the Agency’s evaluation and
determination in accordance with this
paragraph (b) is favorable, the Agency
will proceed in accordance with
paragraph (c) of this section.
(2) If the Agency’s evaluation and
determination in accordance with this
paragraph (b) is unfavorable, the Agency
will notify the lender, in writing,
identifying the reason(s) for determining
ineligibility and any applicable appeal
or review rights. No further processing
of the application will occur. If the

E:\FR\FM\09DEN1.SGM

09DEN1

khammond on DSKJM1Z7X2PROD with NOTICES

Federal Register / Vol. 86, No. 234 / Thursday, December 9, 2021 / Notices
Agency determines it is unable to
guarantee the loan, it will inform the
lender in writing.
(c) FSC guaranteed loan priority
scoring
(1) The Agency will consider
applications in the order they are
received by the Agency; however, for
the purpose of assigning priority points
as described in this paragraph, the
Agency will compare an application to
other pending applications that are
competing for funding.
(2) When applications on hand
otherwise have equal priority, the
Agency will give preference to
applications for guaranteed loans from
qualified veterans.
(3) The Agency will consider
applications as they are submitted. If
available funding is less than what is
requested by applications under
consideration, the Agency will score
each eligible application based on the
point system described below.
(4) A maximum of 115 points can be
awarded in the following categories:
(i) Applicants receive 8 priority points
if the project is located in or serving one
of the top 10% of counties or county
equivalents based upon county risk
score as listed in the COVID–19
Economic Risk Assessment Dashboard
and according to guidance at https://
www.rd.usda.gov/priority-points.
(ii) Applicants receive 8 priority
points if the project is located in or
serving a community with score 0.75 or
above on the CDC Social Vulnerability
Index and according to guidance at
https://www.rd.usda.gov/priority-points.
(iii) Applicants will receive 8 priority
points for either (A) or (B), according to
guidance at https://www.rd.usda.gov/
priority-points.
(A) Applicants will receive points if
the project is located in or serving coal,
oil and gas, and power plant
communities whose economic wellbeing ranks more than 80 on the
Distressed Communities Index.
(B) Applicants will receive points by
demonstrating through written narrative
how proposed climate-impact projects
improve the livelihoods of community
residents and meet pollution mitigation
or clean energy goals.
(iv) Applicants will receive 5 priority
points if the project is located in a city
or county with a current unemployment
rate, as determined by the Department
of Labor, of 125 percent of the Statewide rate or greater. Or, for projects
located in certain territories that may
not have unemployment rates by
localities, the applicant will receive
priority points if the applicant’s
proposed service area has an
unemployment rate exceeding 125

VerDate Sep<11>2014

17:41 Dec 08, 2021

Jkt 256001

percent of the national unemployment
rate as determined by the Bureau of
Labor Statistics. The national
unemployment rate may be found at
https://www.bls.gov/cps.
(v) Applicants will receive 5 priority
points if the project is located within
the boundaries of a federally recognized
Indian Tribe’s reservation, within Tribal
trust lands, or within land owned by an
Alaska Native Regional or Village
Corporation as defined by the Alaska
Native Claims Settlement Act.
(vi) Applicants will receive 20
priority points if the industry is not
already present in the local community.
(vii) Applicants will receive 21
priority points if the business is locally
owned and managed. (The primary
residence of the applicant must be
located within the normal commuting
area of the guaranteed loan project.)
(viii) Applicants will receive 15
priority points if the project creates or
saves a minimum of five permanent jobs
with an average wage exceeding 200
percent of the Federal minimum wage.
(ix) Applicants will receive 10
priority points if the business offers a
healthcare benefits package to all
employees and pays at least 50 percent
of the healthcare premium.
(x) Applicants receive 15 priority
points if the borrower ensures and
certifies to the lender that all laborers
and mechanics employed by contractors
or subcontractors in the performance of
construction work financed in whole or
in part with guaranteed loan funds
under this Notice are paid wages at rates
not less than those prevailing on similar
construction in the locality as
determined by the Secretary of Labor in
accordance with sections 3141 through
3144, 3146, and 3147 of title 40, U.S.C.
Loans guaranteed under this Notice for
applicants that receive such priority
points are further subject to the relevant
regulations contained in 29 CFR part 5.
F. Federal Award Administration
Information
(a) Conditional commitment
(1) Approval. Upon approval of a loan
guarantee the Agency will issue a
‘‘Conditional Commitment’’ to the
lender, containing conditions under
which a loan note guarantee will be
issued. No conditional commitment can
be issued until the loan is obligated. If
a loan note guarantee is not issued by
the conditional commitment expiration
date, the conditional commitment may
be extended at the request of the lender
pending approval of the Agency and
only if there has been no material
adverse change in the borrower or the
borrower’s financial condition since
issuance of the conditional

PO 00000

Frm 00020

Fmt 4703

Sfmt 4703

70101

commitment. If the conditional
commitment is not accepted, the
conditional commitment may be
withdrawn, and funds may be deobligated in accordance with F.(a)(4) of
this notice. Likewise, if the conditional
commitment expires, funds may be deobligated in accordance with section
F.(a)(5) of this notice.
(i) Upon acceptance of the conditional
commitment, the lender agrees not to
modify the scope of the project, overall
facility concept, project purpose, use of
guaranteed loan funds, or other terms
and conditions without Agency written
concurrence in accordance with section
F.(a)(5) of this notice.
(ii) If the lender decides at any time
after receiving a conditional
commitment that it no longer wants a
loan guarantee, the lender must
immediately advise the Agency of the
cancellation in writing. Upon written
notification from the lender, the Agency
will de-obligate the funds associated
with the conditional commitment.
(2) Content. The conditional
commitment will contain the terms
required for issuing a loan note
guarantee, including but not limited to:
(i) Approved use of guaranteed loan
funds and all project funds (sources and
uses of funds);
(ii) Rates and terms of the loan;
(iii) Loan agreement terms including,
but not limited to:
(A) Repayment terms and
amortization provisions of the
guaranteed loan;
(B) Description of real property
collateral, list of other collateral and
identification of the lender’s lien
priority in the collateral;
(C) Identification of persons and
entities guaranteeing payment of the
guaranteed loan and their percentage of
guarantee;
(D) Type and frequency of the
financial statements to be provided by
the borrower and guarantor during the
term of the guaranteed loan (guarantor
statements must be updated at least
annually);
(E) Prohibition against borrower
assuming liabilities or obligations of
others;
(F) Limitations on borrower dividend
payments and compensation of officers,
owners, and members of borrower;
(G) Limitations on the purchase and
sale of equipment and other fixed assets;
(H) Restrictions on mergers,
consolidations, or sales of the business,
project, or guaranteed loan collateral
without the concurrence of the lender;
(I) Limitations on significant
management changes without the
concurrence of the lender;

E:\FR\FM\09DEN1.SGM

09DEN1

khammond on DSKJM1Z7X2PROD with NOTICES

70102

Federal Register / Vol. 86, No. 234 / Thursday, December 9, 2021 / Notices

(J) Maximum debt-to-net worth ratio
or other test for leverage as required by
lender;
(K) Minimum debt service coverage
ratio or other cash coverage test as
required by the lender;
(L) Requirements imposed by the
Agency in its conditional commitment;
(M) Agency environmental
requirements;
(N) Requirement for the lender and
the Agency to have reasonable access to
the project including access for periodic
inspections of the project by a
representative of the lender or the
Agency; and
(O) Requirement for the borrower to
provide the lender and the Agency
performance information during the
term of the guaranteed loan.
(iv) Loan closing requirements;
(v) Lender and borrower
certifications;
(vi) Collateral and lien position
requirements; and
(vii) Other requirements necessary to
protect the Agency.
(3) Change requests. The lender can
request, in writing, changes to the
conditional commitment with
justification. The Agency can deny,
solely at its discretion, changes to the
conditional commitment even if the
changes are otherwise in compliance
with this part. All changes to the
conditional commitment must be
documented by written amendment to
the conditional commitment executed
by all parties.
(4) Acceptance or withdrawal of
conditional commitment. The lender
and borrower must complete and sign
the conditional commitment and return
a copy to the Agency within 60 days. If
the conditional commitment is not
accepted by both the lender and
borrower within 60 days, the
conditional commitment becomes null
and void and the Agency will withdraw
the conditional commitment and deobligate the associated funds.
(5) Modification, and expiration of
conditional commitment. The
conditional commitment issued by the
Agency will be effective for a period of
one year or sufficient time to complete
the guaranteed loan project prior to loan
closing. The lender must submit a
written request to the Agency to extend
the conditional commitment at least 30
days prior to its expiration date and
obtain Agency approval for the
extension. The Agency will consider
this request only if no material adverse
changes in the borrower or the
borrower’s financial condition have
occurred since issuance of the
conditional commitment. If a
conditional commitment expires, the

VerDate Sep<11>2014

17:41 Dec 08, 2021

Jkt 256001

Agency will notify the lender in writing
and may de-obligate the funds. Any
additions or modifications to conditions
stated in the original conditional
commitment must be agreed upon
between the lender, the borrower, and
the Agency.
(b) Changes prior to loan closing.
(1) Change in borrower prior to
closing. Any change in borrower
ownership or organization prior to the
issuance of the loan note guarantee must
meet the applicable guaranteed
program’s eligibility requirements and
must be approved by the Agency.
(2) Transfer to new lender prior to
issuance of the loan note guarantee.
Prior to issuance of the loan note
guarantee, a lender can request a
transfer of an outstanding conditional
commitment to a new lender by
providing the Agency with a letter from
the lender, the borrower, and the
proposed new lender. The request must
include the reason(s) the current lender
no longer desires to be the lender for the
project.
(i) The Agency may approve the
transfer from the current lender to the
proposed new lender provided the new
proposed lender is an eligible lender
(see H.(e)(1) and (2) of this notice) and
no material adverse changes have
occurred in the:
(A) Ownership, control, or legal
structure of the borrower; and
(B) Borrower’s written plan, scope of
work, or the purpose or intent of the
project.
(ii) The Agency will determine if the
proposed new lender is eligible in
accordance with this notice prior to
approving the transfer of lender. The
new lender must execute a new
application form and a lender’s
agreement (unless the new lender
already has a valid lender’s agreement
with the Agency) and must complete a
new credit evaluation in accordance
with this notice. The Agency may
require the new lender to provide other
updated application items as specified
by the Agency.
(iii) If the Agency approves the
transfer to the new lender, the Agency
will issue a letter of amendment to the
original conditional commitment
reflecting the new lender who must
acknowledge acceptance of the
amended conditional commitment in
writing.
(c) Loan closing and conditions
precedent to issuance of loan note
guarantee.
(1) The lender must not close the
guaranteed loan until all conditions of
the conditional commitment are met.
The lender will provide the Agency a
draft of the loan agreement for pre-

PO 00000

Frm 00021

Fmt 4703

Sfmt 4703

closing review and may provide the
Agency draft loan documents for the
Agency’s concurrence that all
conditions of the conditional
commitment are met or will be met.
(2) Simultaneously with or
immediately after the guaranteed loan
closing, the lender must provide to the
Agency the following forms and
documents:
(i) An executed lenders agreement,
unless a lenders agreement executed
under this notice was previously
submitted to the Agency;
(ii) An Agency-approved,
‘‘Guaranteed Loan Closing Report’’;
(iii) A copy of each executed
promissory note and collateral security
documents;
(iv) A copy of the executed final loan
agreement, which must include any
additional requirements imposed by the
Agency in the conditional commitment;
(v) The original, executed Agencyapproved guarantee form(s) for any
required personal, partnership or
corporate guarantees;
(vi) The borrower’s loan closing
balance sheet, if required;
(vii) For loans to public bodies, an
opinion from recognized bond counsel
regarding the adequacy of the
preparation, issuance, and
enforceability of the debt instruments;
(viii) Any other documents required
to comply with applicable law or
required by this part, the conditional
commitment, or the Agency; and
(ix) When requesting issuance of a
loan note guarantee, the lender must
certify to each condition identified in
paragraphs (c)(2)(ix)(D)(1) through (23)
of this section, as applicable.
(A) In making its certification, the
lender can rely on certain written
materials (e.g., certifications,
evaluations, appraisals, financial
statements, and other reports) provided
by the borrower or other qualified third
parties (e.g., independent engineers,
appraisers, accountants, attorneys,
consultants, or other experts).
(B) If the lender is unable to provide
any of the certifications required under
this section, the lender must provide an
explanation satisfactory to the Agency.
(C) The lender must certify, in
accordance with this notice that the
capital/equity requirement was
determined, based on a balance sheet
prepared in accordance with GAAP, and
met, as of the date the guaranteed loan
was closed, giving effect to the entirety
of the loan in the calculation, whether
or not the loan itself is fully advanced.
A copy of the loan closing balance sheet
must be included with the lender’s
certification;

E:\FR\FM\09DEN1.SGM

09DEN1

khammond on DSKJM1Z7X2PROD with NOTICES

Federal Register / Vol. 86, No. 234 / Thursday, December 9, 2021 / Notices
(D) The lender may request the loan
note guarantee be issued prior to
construction in accordance with this
notice; however, the lender must still
certify to all applicable conditions of
this notice and the following:
(1) All requirements of the
conditional commitment have been met;
and
(2) The financial criteria specified in
this notice and any financial criteria
contained in the conditional
commitment were:
(i) Determined in accordance with any
applicable requirements in this notice;
and
(ii) Have been maintained through the
issuance of the loan note guarantee.
Failure to maintain or attain the
minimum financial criteria will result in
the Agency not issuing a loan note
guarantee;
(3) The capital/equity requirement
was determined, based on a balance
sheet prepared in accordance with
GAAP, and met, as of the date the
guaranteed loan was closed, giving
effect to the entirety of the loan in the
calculation, whether or not the loan
itself is fully advanced. A copy of the
loan closing balance sheet must be
included with the lender’s certification;
(4) No major changes have been made
in the applicant, project or lender’s loan
conditions or requirements since the
issuance of the conditional
commitment, unless such changes have
been approved by the Agency;
(5) There has been neither any
material adverse change in the
borrower’s financial condition nor any
other material adverse change in the
borrower during the period of time from
the Agency’s issuance of the conditional
commitment to issuance of the loan note
guarantee regardless of the cause or
causes of the change and whether or not
the change or causes of the change were
within the lender’s or borrower’s
control;
(6) The borrower is a legal entity in
good standing with its regulator (as
applicable) and operating in accordance
with the laws of the State(s) or Tribe
where the borrower was organized or
has a place of business;
(7) The borrower meets the eligibility
requirements as outlined in this notice.
(8) There is a reasonable prospect that
the guaranteed loan and other project
debt will be repaid on time and in full
(including interest) from project cash
flow according to the terms proposed in
the application;
(9) The guaranteed loan has been
properly closed, and the required
security instruments have been properly
executed and all security interests
obtained by the lender have been or will

VerDate Sep<11>2014

17:41 Dec 08, 2021

Jkt 256001

be properly perfected in accordance
with applicable law;
(10) All planned property acquisition
has been or will be completed; all
development has been or will be
substantially completed in accordance
with plans and specifications and
conforms to applicable Federal, Tribal,
State, and local codes; all equipment
required for the project is available, can
be procured and delivered within the
project development schedule, and will
be installed in conformance with
manufacturer’s specifications and
design requirements; and costs have not
exceeded the amount approved by the
lender and the Agency;
(11) The proposed project complies
with all current Federal, Tribal, State,
and local laws and regulatory rules that
affect the project, the borrower, or
lender activities, including, but not
limited to, equal opportunity and Fair
Housing Act requirements and design
and construction requirements;
(12) All lender-required insurance
policies are in effect at the required
levels;
(13) All truth-in-lending and equal
credit opportunity requirements have
been met;
(14) The borrower has marketable title
to the collateral then owned by the
borrower, subject to the rights of the
guaranteed loan and to any other
exceptions approved in writing by the
Agency;
(15) Where required, necessary or
prudent, the borrower has obtained:
(i) A legal opinion relative to the title
and accessibility to any rights-of-way
and easements; and
(ii) A title opinion or title insurance
showing the borrower has good and
marketable title to the real property and
other collateral and fully addressing all
existing mortgages or other lien defects,
restrictions or encumbrances. In those
cases where there is adequate gap
coverage, a title commitment may be
acceptable;
(16) All project funds have been or
will be disbursed for purposes and in
amounts consistent with the conditional
commitment (or Agency-approved
amendment thereof) and the application
submitted to the Agency. Appropriate
lender controls were used to ensure that
all funds were properly disbursed,
including funds for working capital. A
copy of a settlement statement by the
lender detailing the use of loan and
matching/equity funds must be attached
to support this certification;
(17) When applicable, the entire
amount of the loan for working capital
or initial operating expenses have been
disbursed to the borrower, except in
cases where the Agency has approved

PO 00000

Frm 00022

Fmt 4703

Sfmt 4703

70103

disbursement over an extended period
of time and funds are escrowed so that
the settlement statement reflects the full
amount to be disbursed;
(18) When required, personal and/or
corporate guarantees have been obtained
in accordance with this notice;
(19) Lien priorities are consistent with
the requirements of the conditional
commitment. No claims or liens of
laborers, subcontractors, suppliers of
machinery and equipment,
materialmen, or other parties have been
filed against the collateral and no suits
are pending or threatened that would
adversely affect the collateral;
(20) Neither the lender nor any of the
lender’s officers has an ownership
interest in the borrower or is an officer
or director of the borrower, and neither
the borrower nor its officers, directors,
stockholders, or other owners have more
than a 5 percent ownership interest in
the lender;
(21) The loan agreement includes all
borrower compliance measures
identified in the Agency’s
environmental review for avoiding or
reducing adverse environmental
impacts of the project’s construction or
operation;
(22) The lender will comply with the
requirements of the Debt Collection
Improvement Act; and
(23) The lender has executed and
delivered the lender’s agreement,
completed registration in the Agency’s
electronic reporting system, and
electronically submitted the closing
report for the guaranteed loan.
(d) Issuance of the loan note
guarantee.
(1) Issuance. The Agency, at its sole
discretion, will determine if the
conditions specified in the conditional
commitment have been met and
whether to issue the loan note
guarantee. When the Agency is satisfied
that all the conditions specified in the
conditional commitment have been met
and it receives all the required fees plus
the executed lender’s agreement from
the lender, the Agency will issue the
documents identified in paragraphs
(d)(1)(i) through (iii) of this section, as
appropriate.
(i) Loan note guarantee. The Agency
will provide the lender the original loan
note guarantee document which the
lender must attach to the promissory
note. If the lender elected to use the
multi-note system, the Agency will
issue one loan note guarantee for the set
of promissory notes.
(ii) Assignment guarantee agreement.
If the lender assigns any guaranteed
portion of a guaranteed loan to a holder,
the lender, holder, and the Agency will
execute an assignment guarantee

E:\FR\FM\09DEN1.SGM

09DEN1

khammond on DSKJM1Z7X2PROD with NOTICES

70104

Federal Register / Vol. 86, No. 234 / Thursday, December 9, 2021 / Notices

agreement for each assignment. The
lender must fully disburse loan funds of
a promissory note for the approved
purposes of the loan, prior to assigning
the guaranteed portion of a note to a
holder and issuance of the Assignment
of Guarantee Agreement. Disbursement
to an escrow account does not meet this
requirement, except for loan funds for
working capital.
(iii) Certificate of incumbency and
signature. The Agency will provide the
holder an executed certificate of
incumbency form to verify the signature
and title of the Agency official who
signed the Loan Note Guarantee and the
assignment guarantee agreement.
(2) Agency review of closing. The
Agency will review the closing
documents submitted by the lender for
completeness and if all conditions have
been met and all documents have been
provided, the Agency will issue the loan
note guarantee. If the Agency
determines that it cannot issue the loan
note guarantee, the Agency will notify
the lender, in writing, of the reasons and
give the lender a reasonable period
within which to satisfy the objections. If
the lender satisfies the objections within
the time allowed, the Agency will issue
the loan note guarantee.
(3) Cancellation of obligation. A
lender can submit a written request to
the Agency for a partial cancellation.
The lender must include in this request
the reason for the partial cancellation,
the effective date, and the portion to be
canceled. If the Agency conditions for
issuance of the loan note guarantee are
rejected, cannot be met, or funds are, in
whole or in part, no longer needed, the
Agency will cancel the obligation.
(e) Replacement of loan note
guarantee and assignment guarantee
agreement.
If a loan note guarantee or assignment
guarantee agreement has been lost,
stolen, destroyed, mutilated, or defaced
while in the custody of the lender or
holder, the Agency may issue a
replacement to the lender or holder, as
applicable under the conditions
described in (1) and (2) of this
paragraph. The lender is prohibited
from altering or modifying or approving
any alterations to or modifications of
any loan documents without the prior
written approval of the Agency.
(1) Replacement requirements. The
lender must coordinate the activities of
the party who seeks the replacement
documents and must submit the
required documents to the Agency for
processing. A written statement of loss
must be provided. The statement of loss
must include:

VerDate Sep<11>2014

17:41 Dec 08, 2021

Jkt 256001

(i) Legal name and present address of
either the lender or the holder who is
requesting the replacement forms;
(ii) Legal name and address of the
lender of record;
(iii) Capacity of person certifying;
(iv) Full identification of the loan note
guarantee or assignment guarantee
agreement including the name of the
borrower, the Agency’s case number,
date of the loan note guarantee or
assignment guarantee agreement, face
amount of the promissory note in which
an interest was purchased, date of the
promissory note, present balance of the
guaranteed loan, percentage of
guarantee, and, if an assignment
guarantee agreement, the original named
holder and the percentage of the
guaranteed portion of the guaranteed
loan assigned to that holder. Any
existing parts of the document to be
replaced must be attached to the
certificate;
(v) A full statement of circumstances
of the loss, theft, destruction,
defacement, or mutilation of the loan
note guarantee or assignment guarantee
agreement; and
(vi) For the holder, evidence
demonstrating current ownership of the
assignment guarantee agreement. If the
present holder is not the same as the
original holder, the lender must include
a copy of the endorsement of each
successive holder in the chain of
transfer from the initial holder to
present holder. If copies of the
endorsement cannot be obtained, the
lender must submit the best available
records of transfer (e.g., order
confirmation, canceled checks, etc.).
(2) Indemnity bond. An indemnity
bond acceptable to the Agency must
accompany the request for replacement
except when the holder is the United
States, a Federal Reserve Bank, a
Federal Government corporation, a State
or territory, the District of Columbia or
an Indian Tribe. The indemnity bond
must:
(i) Be issued by a qualified surety
company holding a certificate of
authority from the Secretary of the
Treasury and listed in Treasury
Department Circular 570, except when
the outstanding principal balance and
accrued interest due the present holder
is less than $1 million as verified by the
lender via a written letter of certification
of balance due;
(ii) Be issued and payable to the
United States of America acting through
the Agency;
(iii) Be in an amount not less than the
unpaid principal and interest; and
(iv) Hold the Agency harmless against
any claim or demand that might arise or
against any damage, loss, costs, or

PO 00000

Frm 00023

Fmt 4703

Sfmt 4703

expenses that might be sustained or
incurred by reason of the loss or
replacement of the instruments.
(f) Other Federal, Tribal, State, and
local requirements.
Beginning on the date of issuance of
the loan note guarantee, lenders and
borrowers must:
(1) Coordinate with all appropriate
Federal, Tribal, State and local agencies
that may have jurisdiction or
involvement in each project; and
(2) Comply with all current Federal,
Tribal, State and local laws and rules, as
well as applicable regulatory
commission rules, that affect the project,
borrower, or lender. Compliance
activities include, but are not limited to:
(i) Organization and borrower’s
authority to design, construct, develop,
operate, and maintain the proposed
facilities;
(ii) Borrowers engaged in processing
of meat, poultry, processed egg
products, and Siluriformes must comply
with the requirements of the U.S.
Department of Agriculture (USDA) Food
Safety and Inspection Service.
Borrowers engaged in processing of
other foods and food ingredients must
comply with the requirements of the
Food and Drug Administration;
(iii) Borrowing money, giving
security, and raising revenues for
repayment;
(iv) Land use zoning;
(v) Health, safety, and sanitation
standards as well as design and
installation standards; and
(vi) Protection of the environment and
consumer affairs.
(g) Planning and performing
development.
In complying with the requirements
of this section, the lender may rely on
written materials and other reports
provided by an independent engineer
and other qualified consultants.
(1) Design requirements. The lender
must ensure that all facilities
constructed with guaranteed loan funds
are:
(i) Designed using accepted
architectural, engineering, and design
practices, taking into consideration any
Agency comments when the facility is
being designed;
(ii) Designed in conformance with
applicable Federal, Tribal, State, and
local codes and requirements; and
(iii) Constructed to support operations
at the level and quality contemplated by
the borrower using accepted
architectural and engineering practices.
(2) Rights-of-ways, easements, and
property rights. The lender is
responsible for ensuring that the
borrower has:
(i) Obtained valid, continuous, and
adequate rights-of-way and easements

E:\FR\FM\09DEN1.SGM

09DEN1

khammond on DSKJM1Z7X2PROD with NOTICES

Federal Register / Vol. 86, No. 234 / Thursday, December 9, 2021 / Notices
needed for the construction, operation,
and maintenance of a project; and
(ii) Obtained and recorded such
releases, consents, or subordinations to
such property rights from lienholders of
outstanding liens or other instruments
as may be necessary for the
construction, operation, and
maintenance of the project and to
provide the required security.
(3) Permits, agreements, and licenses.
It is the lender’s responsibility to ensure
the borrower obtains all permits,
agreements, and licenses that are
applicable to the project.
(4) Insurance. It is the lender’s
responsibility to ensure the borrower
obtains and maintains borrower and
project insurance in substance and
amount similar to that ordinarily
required by lenders in the industry.
(5) Construction monitoring
requirements. The lender, or its
designated agent, will monitor the
progress of construction of the project
and undertake the reviews and
inspections necessary to ensure that
construction conforms to applicable
Federal, Tribal, State, and local code
requirements and that construction
proceeds in accordance with the plans,
specifications, and contract documents.
(i) Construction inspections. The
lender must notify the Agency of any
scheduled field inspections during
construction. The Agency may attend
any field inspections the lender may
conduct. Any Agency inspection,
including those with the lender, are for
the benefit of the Agency only (and not
for the benefit of other parties in
interest) and do not relieve any parties
of interest of their responsibilities to
conduct necessary inspections.
(ii) Inspectors. On a case-by-case basis
in the event that the Agency determines
that there is additional risk to the
government, the Agency may require the
use of a qualified, independent
inspector to inspect construction to
ensure the project is being adequately
built to meet the borrower’s
requirements of the borrower’s
approved project and comply with all
applicable codes and legal
requirements.
(6) Issuance of loan note guarantee
prior to completion of the project’s
construction. The lender may request
that the loan note guarantee be issued
prior to completion of a project’s
construction. The lender’s request will
be considered by the Agency, who may
require credit risk mitigation. The
lender must verify and include evidence
of the following in its request:
(i) The promissory note specifying the
full term of the note and containing the

VerDate Sep<11>2014

17:41 Dec 08, 2021

Jkt 256001

terms and conditions of each draw
period;
(ii) The borrower and lender have
entered into a contract with an
independent disbursement and
monitoring firm with a construction
monitoring plan, acceptable to and
approved by the Agency, or the lender
demonstrates and documents that it has
the capacity and experience to disburse
funds and provide a monitoring plan
acceptable to the Agency;
(iii) The borrower and lender have
agreed to a detailed timetable for the
project with a corresponding budget of
costs setting forth the parties
responsible for payment. The timetable
and budget will be confirmed as
adequate for the planned development
by a qualified independent consultant
(e.g., the project architect or engineer)
with demonstrated experience relating
to the project’s industry.
(iv) The borrower has entered into a
firm, fixed-price construction contract
with an independent general contractor
with costs outlined in detail and terms
specifying change order approvals, the
agreed retainage percentage, and the
disbursement schedule;
(v) Evidence the lender has properly
vetted the financial feasibility and past
performance of the contractor to show
they are able to complete the project or
that the lender has mitigated risk in the
event the project is never completed,
such as requiring a 100-percent
performance/payment bond on the
borrower’s contractor to be maintained
until the contractor is released from its
obligation. The bonding agent must be
listed on Treasury Circular 570;
(vi) Evidence, which the Agency at its
sole discretion determines is
satisfactory, that the lender has
completed the due diligence necessary
to confirm that the contractor is able to
complete the project based on
information including, but not limited
to, the financial statements and past
performance of the contractor;
(vii) When applicable, the borrower
has entered into a contract with an
independent technology development
firm guaranteeing the following:
Completion of the project with the
necessary technology to successfully
run the project and system performance
for projects that utilize integrated
processing equipment and systems. The
intent of this provision is to ensure that
all technology proposed for the project
can be successfully integrated together
to ensure successful installation and
performance of the system;
(viii) Evidence, in form and substance
satisfactory to the Agency, that
sufficient contingency funding is in
place to handle unforeseen cost

PO 00000

Frm 00024

Fmt 4703

Sfmt 4703

70105

overruns without seeking additional
guaranteed assistance.
(7) Reporting during construction.
Regardless of when the loan note
guarantee is issued, all lenders must
report any problems in project
development to the Agency within 15
calendar days of identifying the
problem. If the loan note guarantee has
been issued prior to construction or
completion of the project, the lender
must provide monthly construction
reports that contain:
(i) Certifications for each draw request
as follows:
(A) Certification by the independent
engineer or qualified consultant to the
lender that the work referred to in the
draw has been successfully completed;
and
(B) Certification by the borrower and
independent engineer or qualified
consultant that the guaranteed loan
funds of the prior draw have been
applied to eligible project costs in
accordance with the draw request and
that the contractors have delivered
mechanics lien waivers in connection
with such draw;
(ii) List of invoices;
(iii) Details regarding the borrower’s
equity, other funds, and guaranteed loan
funds disbursed to date;
(iv) Status of construction and
inspection reports;
(v) Inspection reports; and
(vi) Explanation of concerns, potential
problems, cost overruns, etc.
(8) Use of guaranteed loan funds. The
lender must ensure that:
(i) All borrower funds are utilized
prior to guaranteed loan funds;
(ii) Guaranteed loan funds are only
used for eligible project costs in
accordance with the purposes approved
by the Agency in the conditional
commitment and in accordance with the
plans, specifications, and contract
documents; and
(iii) The project will be completed
within the approved budget.
(9) Project completion. Once
construction of the project is completed,
the lender must obtain and have on file
all mechanics lien waivers or releases
from all contractors and materialmen.
The lender will provide to the Agency:
(i) A copy of the notice of completion
or similar document issued by the
relevant jurisdiction;
(ii) Certification that all funds were
used for authorized purposes; and
(iii) A written certification that the
project will be used for its intended
purpose and will meet the borrower’s
needs and guaranteed loan purposes in
accordance with the application
approved by the Agency.
(h) Compliance with other Federal
laws. Lenders and Borrowers must

E:\FR\FM\09DEN1.SGM

09DEN1

khammond on DSKJM1Z7X2PROD with NOTICES

70106

Federal Register / Vol. 86, No. 234 / Thursday, December 9, 2021 / Notices

comply with other applicable Federal
laws, including Equal Employment
Opportunity Act, the Equal Credit
Opportunity Act, the Fair Housing Act,
and the Civil Rights Act of 1964.
Guaranteed loans that involve the
construction of or addition to facilities
that accommodate the public must
comply with the Architectural Barriers
Act Accessibility Standard. The
borrower and lender are responsible for
ensuring compliance with these
requirements.
(i) Environmental responsibilities. The
lender must ensure that the borrower
has:
(1) Provided the necessary
environmental information to enable the
Agency to undertake its environmental
review process in accordance with 7
CFR part 1970, ‘‘Environmental Policies
and Procedures,’’ or successor
regulation, including the provision of all
required Federal, State, and local
permits;
(2) Complied with any mitigation
measures required by the Agency; and
(3) Not taken any actions or incurred
any obligations with respect to the
proposed project that would either limit
the range of alternatives to be
considered during the Agency’s
environmental review process or that
would have an adverse effect on the
environment.
(j) Servicing.
(1) The provisions of 7 CFR 5001
Subpart F, including applicable
definitions, will apply for servicing the
loans guaranteed under this notice,
including oversight, monitoring and
reporting requirements and project
completion requirements that are
applicable to each guaranteed loan
made under this part, except as may be
otherwise indicated. Servicing topics
covered include audits and financial
reports; collateral; loan transfers and
assumptions; lender transfers; mergers;
servicing fees; subordinations of lien
position; repurchases; additional
expenditures and loans; interest rate
changes; lender failures; borrower
defaults; protective advances;
liquidation; bankruptcy; litigation; loss
calculations and payments; future
recovery; property acquired by the
lender; and termination of the loan note
guarantee.
(2) In addition to the financial reports
required under 7 CFR 5001.504,
commencing the first full calendar year
following the year in which project
construction was completed and
continuing for three full years, the
lender shall obtain from the borrower
and submit to the agency an outcome
project performance report noting the
project’s success in increasing capacity

VerDate Sep<11>2014

17:41 Dec 08, 2021

Jkt 256001

or contributing to the resilience,
diversity, or security of food supply
chains. The project performance metrics
shall align with the information
provided in the feasibility study about
how the project would increase capacity
or make the food supply chain more
resilient, diverse, or secure. If the
project has not performed as intended,
a report detailing the circumstances
affecting performance must be provided
to the Agency. The lender must submit
project performance reports to the
Agency within 120 days of the end of
the borrower’s fiscal year.
G. Federal Awarding Agency Contact(s)
For general questions about this
notice, please contact
[email protected] as
outlined in the ADDRESSES section of
this notice or the program website at:
https://www.rd.usda.gov/foodsupply
chainloans.
H. Other Information
(a) Exception authority. The
Administrator may, on a case-by-case
basis grant an exception to any
requirement or provision of this notice
provided that such an exception is in
the best financial interests of the Federal
government. Exercise of this authority
cannot be in conflict with applicable
law.
(b) Appeals. Borrowers, lenders, and
holders may have appeal or review
rights for Agency decisions made under
this part. Agency decisions that are
adverse to the individual participant are
appealable, while matters of general
applicability are not subject to appeal;
however, such decisions are reviewable
for appealability by NAD. All appeals
will be conducted by NAD and will be
handled in accordance with 7 CFR part
11.
(1) The borrower, lender, and holder
can appeal any Agency decision that
directly and adversely affects them.
(i) For an adverse decision that affects
the borrower, the lender and borrower
must jointly execute a written request
for appeal of an adverse decision made
by the Agency.
(ii) An adverse decision that affects
only the lender can be appealed by the
lender only.
(iii) An adverse decision that affects
only the holder can be appealed by the
holder only.
(2) In cases where the Agency has
denied or reduced the amount of final
loss payment to the lender, the adverse
decision can be appealed only by the
lender.
(3) A decision by a lender adverse to
the interest of the borrower is not a
decision by the Agency, even if it was

PO 00000

Frm 00025

Fmt 4703

Sfmt 4703

concurred in by the Agency, and
therefore cannot be reviewed for
appealability or appealed to NAD.
(c) General lender responsibilities.
(1) Lenders are responsible for
originating and servicing loans
guaranteed by the Agency under this
notice in accordance with the
provisions of this notice. Any action or
inaction on the part of the Agency does
not relieve the lender of its
responsibilities.
(2) Lenders can contract for services,
but such contracting does not relieve a
lender from its responsibilities as
identified in this notice.
(3) If a lender fails to comply with the
requirements of this notice, the Agency
may reduce any loss payment in
accordance with the lender’s agreement
and loan note guarantee.
(4) Lenders are responsible for
becoming familiar with Federal
environmental requirements;
considering, in consultation with the
prospective borrower, the potential
environmental impacts of their
proposals at the earliest planning stages;
and developing proposals that minimize
the potential to adversely impact the
environment.
(i) Lenders must assist the borrower in
providing details of the project’s impact
on the environment and historic
properties in accordance with 7 CFR
part 1970, ‘‘Environmental Policies and
Procedures,’’ (or successor regulation),
when applicable; assist in the collection
of additional data when the Agency
needs such data to complete its
environmental review of the proposal;
and assist in the resolution of
environmental problems.
(ii) Lenders must ensure the borrower
has:
(A) Provided the necessary
environmental information to enable the
Agency to undertake its environmental
review process in accordance with 7
CFR part 1970, ‘‘Environmental Policies
and Procedures,’’ or successor
regulation, including the provision of all
required Federal, Tribal, State, and local
permits;
(B) Complied with any mitigation
measures required by the Agency; and
(C) Not taken any actions or incurred
any obligations with respect to the
proposed project that will either limit
the range of alternatives to be
considered during the Agency’s
environmental review process or that
will have an adverse effect on the
environment.
(iii) Lenders must alert the Agency to
any environmental issues related to a
proposed project or items that may
require extensive environmental review.
(d) Approvals, regulations, and forms.

E:\FR\FM\09DEN1.SGM

09DEN1

khammond on DSKJM1Z7X2PROD with NOTICES

Federal Register / Vol. 86, No. 234 / Thursday, December 9, 2021 / Notices
(1) When Agency approval or
concurrence is required, it must be in
writing and must be obtained prior to
the action for which approval or
concurrence is required is taken.
(2) All references to statutes and
regulations include any and all
successor statutes and regulations.
(3) All references to forms include any
and all successor forms as specified by
the Agency.
(4) Copies of all regulations and forms
referenced in this notice can be obtained
through the Agency and from the
Agency’s website at https://
www.rd.usda.gov/
foodsupplychainloans.
(e) Eligible lenders.
(1) To become a lender under this
notice, the lending entity must meet the
requirements specified in 7 CFR
5001.130 Lender eligibility
requirements. Lenders approved by the
Agency as an eligible lender under 7
CFR 5001.130 and that are in
compliance with 7 CFR 5001.132
‘‘Maintenance of approved lender
status’’ and the requirements of this
notice, are eligible lenders under this
notice. Lenders must continue to
comply with the requirements of 7 CFR
5001.132 ‘‘Maintenance of approved
lender status.’’
(2) All lenders must have a UEI which
can be obtained at https://
www.SAM.gov/content/home.
(i) Each lender applying for loan
guarantee must (A) be registered in the
System for Award Management (SAM)
before submitting its application and (B)
provide a valid UEI in its application,
unless determined exempt under 2 CFR
25.110.
(ii) Lender must maintain an active
SAM registration, with current, accurate
and complete information, at all times
during which it has an active FSC
guaranteed loan or an application under
consideration by the Agency.
(iii) Lender must complete the
Financial Assistance General
Certifications and Representations in
SAM.
(iv) The Agency will not determine
lender eligibility until the lender has
complied with all applicable UEI and
SAM requirements. If a lender has not
fully complied with the requirements by
the time the Agency is ready to approve
the guaranteed loan application, the
Agency may determine that the lender
is not eligible under this notice.
(f) Lender’s agreement.
Agency approval of the lender will be
evidenced by an outstanding lender’s
agreement, between the Agency and the
lender. When approved to participate as
a lender under this notice, the lender
must execute a lender’s agreement

VerDate Sep<11>2014

17:41 Dec 08, 2021

Jkt 256001

before the Agency will issue a loan note
guarantee.
(g) Access to records.
The lender must permit
representatives of the Agency (or other
agencies of the United States) to inspect
and make copies of any records of the
lender pertaining to Agency guaranteed
loans during regular office hours of the
lender or at any other time upon
agreement between the lender and the
Agency. In addition, the lender must
cooperate fully with Agency oversight
and monitoring of all lenders involved
in any manner with any guarantee to
ensure compliance with this Notice.
Such oversight and monitoring will
include, but is not limited to, reviewing
lender records and meeting with
lenders.
(h) Guarantee provisions.
(1) A loan note guarantee issued
under this notice constitutes an
obligation supported by the full faith
and credit of the United States and is
incontestable except for fraud or
misrepresentation of which a lender or
holder has actual knowledge at the time
it becomes such lender or holder, or
which a lender or holder participates in
or condones.
(2) A guaranteed loan under this
notice will be evidenced by a loan note
guarantee issued by the Agency.
(3) The entire loan must be secured by
the same collateral with equal lien
priority for the guaranteed and
unguaranteed portions of the loan. The
unguaranteed portion of the guaranteed
loan will neither be paid first nor given
any preference or priority over the
guaranteed portion. A parity or junior
lien position in the guaranteed loan
collateral may be considered on a caseby-case basis and must be approved by
the Agency.
(4) The lender must remain mortgagee
and secured party of record
notwithstanding the fact that another
party may hold a portion of the
guaranteed loan.
(5) The lender will receive all
payments of principal and interest on
account of the entire guaranteed loan
and must promptly remit to each holder
and participant, if any, its pro rata share
of any payment within 30 days of the
lender’s receipt thereof from the
borrower. Holder or participant
payments are determined according to
their respective interest in the
guaranteed loan, less only the lender’s
servicing fee.
(6) Any claim against a loan note
guarantee or assignment guarantee
agreement that is attached to, or relating
to, a promissory note that provides for
payment of interest-on-interest, default
charges, penalty interest, or late

PO 00000

Frm 00026

Fmt 4703

Sfmt 4703

70107

payment fees will be reduced to remove
such interest, fees, and charges.
(7) The loan note guarantee is
unenforceable by the lender to the
extent that any loss is occasioned by:
(i) The violation of usury laws;
(ii) Use of guaranteed loan funds for
unauthorized loan purposes in
accordance with Section C.(d) of this
notice or to the extent that those funds
are used for purposes other than those
specifically approved by the Agency in
its conditional commitment or
amendment thereof;
(iii) Failure to obtain, perfect,
document, and or maintain the required
collateral or security position regardless
of the time at which the Agency
acquires knowledge thereof; and
(iv) Negligent loan origination or
negligent loan servicing as determined
and documented by the Agency.
(8) The Agency will guarantee
payment as follows:
(i) To any holder, 100 percent of any
loss sustained by the holder on the
guaranteed portion of the guaranteed
loan it owns and on interest due (as
determined under paragraph (h)(9) of
this section) on such portion less any
outstanding servicing fee.
(ii) To the lender, any loss sustained
by the lender on the guaranteed portion
of the guaranteed loan, including
principal and interest (as determined
under paragraph (h)(9) of this section)
evidenced by the promissory note(s) or
assumption agreements entered into in
connection with an Agency approved
transfer and assumption, and secured
advances for protection and
preservation of collateral made with the
Agency’s authorization if applicable.
(9) Accrued interest payments. The
Agency will guarantee accrued interest
in accordance with paragraph (h)(9)(i) or
(ii), as applicable, of this section.
(i) If the lender owns all or a portion
of the guaranteed portion of the
guaranteed loan or makes a protective
advance, the Agency, in its sole
discretion, may cover interest on the
guaranteed portion for the 90 days from
the most recent delinquency effective
date, and up to a total of 180 days, only
if:
(A) The lender, and not the Agency,
has repurchased all holder interests in
the guaranteed loan;
(B) The lender is actively engaged in
a credit resolution with the borrower to
bring the account current or fully
liquidate the collateral under the terms
of a liquidation plan approved by the
Agency; and
(C) Concurrence for inclusion of the
extended period of interest to the lender
is received from the Agency.

E:\FR\FM\09DEN1.SGM

09DEN1

khammond on DSKJM1Z7X2PROD with NOTICES

70108

Federal Register / Vol. 86, No. 234 / Thursday, December 9, 2021 / Notices

(ii) If the guaranteed loan has one or
more holders, the lender will issue an
interest termination letter to each holder
establishing the termination date for
interest accrual. The loan note guarantee
will not cover interest to any holder
accruing after the greater of 90 days
from the date of the most recent
delinquency effective date as reported
by the lender or 30 days from the date
of the interest termination letter. The
Agency at its sole discretion may notify
each holder of the interest termination
provisions if it is determined that lender
correspondence to holders is inadequate.
(i) Participation or assignment of
guaranteed loan.
(1) General. The lender may obtain
participation in the loan or assign all or
part of the guaranteed portion of the
guaranteed loan on the secondary
market subject to the conditions
specified in paragraphs (1) through (8)
of this section or retain the entire
guaranteed loan.
(2) Participation. The lender may
obtain participation in the loan under
its normal operating procedures;
however, the lender must retain title to
and possession of the promissory note(s)
and retain the lender’s interest in the
collateral.
(3) Assignment. Any assignment by
the lender of the guaranteed portion of
the loan must be accomplished in
accordance with the conditions in the
lender’s agreement and the provisions of
this section. The holders and the
borrower have no rights or obligations to
one another.
(4) Minimum retention by the lender.
Minimum retention at all times must be
from the unguaranteed portion of the
loan and cannot be participated to
another person.
(i) The lender must hold a minimum
of 7.5 percent of the total loan amount.
(ii) The lender must retain its security
interest in the collateral and retain the
servicing responsibilities for the
guaranteed loan.
(iii) The Agency can approve a
reduction of the minimum retention
requirement below the applicable
percentage on a case-by-case basis when
the lender establishes to the Agency’s
satisfaction that reduction of the
minimum retention percentage is
necessary to meet compliance with the
lender’s regulatory authority.
(5) Prohibition. The lender must not
assign or participate any amount of the
guaranteed or non-guaranteed portion of
the loan to the borrower, borrower’s
officers, directors, stockholders, other
owners, or to members of their
immediate families, or to a parent

VerDate Sep<11>2014

17:41 Dec 08, 2021

Jkt 256001

company, an affiliate, or a subsidiary of
the borrower.
(6) Secondary market. The lender
must properly close its loan and fully
disburse loan funds of a promissory
note for the approved purposes of the
loan prior to assignment of the
guaranteed portion of the promissory
note(s) on the secondary market. The
lender can assign all or part of the
guaranteed portion of the loan only if
the loan is not in default.
(7) Lender’s servicing fee to holder.
The assignment guarantee agreement
must clearly state the guarantee portion
of loan as a percentage and
corresponding dollar amount of the
guaranteed portion of the guaranteed
loan it represents and the lender’s
servicing fee. The lender cannot charge
the Agency a servicing fee and servicing
fees are not eligible expenses for loss
claim.
(8) Distribution of proceeds. The
lender must apply all loan payments
and collateral proceeds received, after
payment of liquidation expenses, to the
guaranteed and unguaranteed portions
of the loan on a pro rata basis.
(9) Promissory note(s). A loan note
guarantee is issued to the lender for a
specific promissory note(s) executed
between the lender and the borrower.
The lender must retain title to and
possession of the guaranteed promissory
note(s), retain the lender’s interest in the
collateral, and retain the servicing
responsibilities for the guaranteed loan.
The lender is prohibited from issuing
any additional promissory notes at a
later date for the same guaranteed loan.
(i) The lender may assign all or part
of the guaranteed portion of the loan,
including interest strips, to one or more
holders by using an assignment
guarantee agreement for each holder.
The lender must complete and execute
the assignment guarantee agreement and
return it to the Agency for execution
prior to holder execution.
(ii) The lender or holder may request
a certificate of incumbency and
signature from the Agency.
(iii) A holder, upon written notice to
the lender and the Agency, may reassign
the unpaid guaranteed portion of the
loan, in full, assigned under the
assignment guarantee agreement.
Holders can only reassign the complete
block they have received and cannot
subdivide or further split their interest
in the guaranteed portion of a loan or
retain an interest strip.
(iv) Upon notification and completion
of the assignment through the use of the
assignment guarantee agreement, the
assignee succeeds to all rights and
obligations of the holder thereunder.
Subsequent assignments require notice

PO 00000

Frm 00027

Fmt 4703

Sfmt 4703

to the lender and Agency using any
format, including that used by the
Securities Industry and Financial
Markets Association (formerly known as
the Bond Market Association), together
with the transfer of the original
assignment guarantee agreement.
(v) The Agency will not execute a new
assignment guarantee agreement to
affect a subsequent reassignment.
(10) Rights and liabilities. When a
guaranteed portion of a loan is assigned
to a holder using an assignment
guarantee agreement, the holder
succeeds to all rights of the lender
under the loan note guarantee to the
extent of the portion purchased. The
full, legal interest in the promissory
note must remain with the lender, and
the lender remains bound to all
obligations under the loan note
guarantee, lender’s agreement, and
Agency regulations applicable to the
guarantee.
(i) A guarantee and right to require
purchase in accordance with the
provisions of this Notice will be directly
enforceable by a Holder
notwithstanding any fraud or
misrepresentation by the lender or any
unenforceability of the loan guarantee
by the lender, except for fraud or
misrepresentation of which the holder
had actual knowledge at the time it
became the holder or in which the
holder participates or condones.
(ii) The lender must not represent a
conditional commitment of guarantee as
a loan guarantee.
(iii) The lender must reimburse the
Agency for any payments the Agency
makes to a holder on the lender’s behalf
under the loan note guarantee, given the
lender would not be entitled to the
payments had they retained the entire
interest in the loan.
(j) Repurchase from holder.
(1) General. A holder can make
written demand on either the lender or
the Agency to repurchase the unpaid
guarantee portion of the loan when the
borrower is in monetary default or when
the lender has failed to pay the holder
its pro-rata share of any payment made
by the borrower within 30 days of the
lender’s receipt thereof from the
borrower. When making written
demand on the lender, the holder must
concurrently send a copy of the demand
letter to the Agency.
(i) The lender is encouraged to
repurchase the guarantee, upon written
demand of a holder, to facilitate the
accounting of funds, resolve any loan
problem, and resolve the monetary
default, where and when reasonable.
The benefit to the lender is that it may
re-assign the guaranteed portion of the
loan and then continue collection of its

E:\FR\FM\09DEN1.SGM

09DEN1

khammond on DSKJM1Z7X2PROD with NOTICES

Federal Register / Vol. 86, No. 234 / Thursday, December 9, 2021 / Notices
servicing fee, if any, when the monetary
default is cured.
(ii) When a lender receives a written
demand for repurchase from a holder,
the lender must notify any other holder
and the Agency within 30 calendar days
of receipt of the written demand. The
lender must inform all parties if the
lender will repurchase the unpaid
guaranteed portion of the loan from the
requesting holder.
(iii) Upon repurchase the holder will
re-assign the assignment guarantee
agreement to the lender without
recourse.
(2) Repurchase by lender for loan
servicing purposes. If the lender,
borrower, and holder are unable to agree
to restructuring of loan repayment,
interest rate, or loan terms to resolve
any loan problem or resolve any default
and repurchase of the guaranteed
portion of the loan is necessary to
adequately service the loan, the holder
must reassign the guaranteed portion of
the loan to the lender. The reassignment
must be for an amount not less than the
holder’s portion of unpaid principal and
accrued interest on such portion less the
lender’s servicing fee.
(i) Upon repurchase the holder will
re-assign the assignment guarantee
agreement to the lender without
recourse.
(ii) The lender must not repurchase
from the holder for arbitrage or other
purposes to further its own financial
gain.
(iii) Any repurchase from a holder
may only be made after the lender
obtains the Agency’s written approval.
(3) Agency repurchase. If the lender
does not repurchase the guaranteed
portion from the holder, the Agency
may, at its option, purchase such
guaranteed portion of the loan for loan
servicing purposes. A holder can submit
a written demand to the Agency for
repurchase only if the lender declines to
repurchase. If a prior written demand
was not made upon the lender, the
Agency will notify the lender and allow
up to seven calendar days for the lender
to exercise its option to repurchase as
provided in this section.
(4) Lender does not repurchase. If the
lender does not repurchase the unpaid
guaranteed portion of a loan as provided
in paragraph (j)(1) of this section, the
Agency will, within 30 calendar days
after written demand to the Agency
from the holder, purchase from the
holder the unpaid principal balance of
the guaranteed portion together with
accrued interest to date of repurchase or
the interest termination date, whichever
is sooner, less the lender’s servicing fee.
The guarantee will pay accrued interest

VerDate Sep<11>2014

17:41 Dec 08, 2021

Jkt 256001

to the holder on the loan as determined
under this notice.
(5) Written demand content. The
holder must include in its written
demand to the Agency:
(i) A copy of the written demand
made upon the lender;
(ii) A copy of the lender’s denial to
repurchase the unpaid guaranteed
portion of the guaranteed loan;
(iii) Evidence of the right to require
payment from the Agency as provided
by the holder or duly authorized agent.
Such evidence must consist of the
original assignment guarantee
agreement properly assigned to the
Agency without recourse including all
rights, title, and interest in the loan;
(iv) The amount due including unpaid
principal, unpaid interest to date of
demand, and interest subsequently
accruing from date of demand to
proposed payment date; and
(v) When the initial holder has
assigned its interest, the original
assignment guarantee agreement and an
original of each Agency-approved
reassignment document in the chain of
ownership, with the latest reassignment
being assigned to the Agency without
recourse, including all rights, title, and
interest in the guarantee.
(6) Payment. Unless otherwise agreed
upon, payment will not be later than 30
calendar days from the date of demand.
(i) Upon request by the Agency, the
lender must promptly furnish (within
30 calendar days of such request) a
current statement, certified by an
appropriate authorized officer of the
lender, of the unpaid principal and
interest then owed by the borrower on
the loan and the amount then owed to
any holder, along with the information
necessary for the Agency to determine
the appropriate amount due the holder.
(ii) Any discrepancy between the
amount claimed by the holder and the
information submitted by the lender
must be resolved between the lender
and the holder before payment will be
approved. The Agency will notify both
parties and such conflict will suspend
the running of the 30-calendar-day
payment requirement.
(iii) If a repurchase of a guaranteed
loan includes the capitalization of
interest, interest accrued on the
capitalized interest will not be paid to
the holder.
(7) Subrogation. When the Agency
purchases a loan from a holder it
assumes all rights that were previously
held by the holder.
(8) Servicing fee. When the Agency
purchases the guaranteed portion of the
loan from a holder, the lender’s
servicing fee will stop on the date that
interest was last paid by the borrower.

PO 00000

Frm 00028

Fmt 4703

Sfmt 4703

70109

The lender can neither charge a
servicing fee to the Agency nor collect
such fee from the Agency.
(9) Accrued interest. If the Agency
repurchases 100 percent of the
guaranteed portion of a loan and
becomes the holder, interest accrual on
the loan will cease until the lender
resumes remittance of the pro rata
payments to the Agency.
(10) Establishing interest termination
date. When a guaranteed loan has been
delinquent more than 60 calendar days
and no holder comes forward or when
the lender has accelerated the account,
and subject to the expiration of any
forbearance or workout agreement, the
lender, or the Agency at its sole
discretion, must issue a letter to the
holder(s) establishing the interest
termination date.
(11) Obligations and rights. Purchase
by the Agency neither changes, alters, or
modifies any of the lender’s obligations
to the Agency arising from the lender’s
agreement, guaranteed loan, or loan note
guarantee, nor does it waive any of the
Agency’s rights against the lender. The
Agency will have the right to set-off
against the lender all rights inuring to
the Agency as the holder of the
instrument against the Agency’s
obligation to the lender under the loan
note guarantee.
(12) Accelerated loan. When the
lender has accelerated the loan and the
lender holds all or a portion of the
guaranteed loan, an estimated loss claim
must be filed by the lender with the
Agency within 60 calendar days from
the date the loan was accelerated.
(13) Interest termination during
bankruptcy. When a borrower files a
Chapter 7 liquidation plan, the lender
shall immediately notify the Agency
and submit a liquidation plan. The
Agency will establish an interest
termination date based on the date
Interest was last paid to the lender.
When a borrower files either a Chapter
9 or Chapter 11 bankruptcy
restructuring plan, the Agency and
lender shall meet to discuss the
bankruptcy procedure, the ability of the
borrower to meet their restructuring
plan, the lender’s treatment of accruing
interest, and potentially establish an
interest termination date for the
guaranteed loan. If the restructuring
bankruptcy Chapter 9 or Chapter 11 is
converted to a liquidation bankruptcy
Chapter 7 by court order, the interest
termination date will be the date of such
conversion.
I. Statutory and Executive Order
Reviews
(a) Paperwork Reduction Act.

E:\FR\FM\09DEN1.SGM

09DEN1

khammond on DSKJM1Z7X2PROD with NOTICES

70110

Federal Register / Vol. 86, No. 234 / Thursday, December 9, 2021 / Notices

In accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C.
chapter 35), USDA requested that the
Office of Management and Budget
(OMB) conduct an emergency review of
a new information collection that
contains the Information Collection and
Recordkeeping requirements contained
in this notice.
In addition to the emergency
clearance, the regular clearance process
is hereby being initiated to provide the
public with the opportunity to comment
under a full comment period, as the
Agency intends to request regular
approval from OMB for this information
collection. Comments from the public
on new, proposed, revised, and
continuing collections of information
help the Agency assess the impact of its
information collection requirements and
minimize the public’s reporting burden.
Comments may be submitted regarding
this information collection through the
Federal eRulemaking Portal at https://
www.regulations.gov. In the ‘‘Search for
Rules, Proposed Rules, Notices or
Supporting Documents’’ box, type
‘‘RBS–21–BUSINESS–0036’’ to submit
or view public comments and to view
supporting and related materials
available electronically. Information on
using Regulations.gov, including
instructions for accessing documents,
submitting comments, and viewing the
docket after the close of the comment
period, is available through the site’s
‘‘FAQ’’ link. Comments on this
information collection must be received
by February 7, 2022.
Title: Food Supply Chain Guaranteed
Loan Program.
OMB Control Number: 0570–NEW.
The following estimates are based on
the average over the first 3 years the
program is in place.
Estimate of Burden: Public reporting
burden for this collection of information
is estimated to average 2.542 hours per
response.
Respondents: Institutions of higher
education, private entities,
governmental entities, nonprofits,
Indian Tribes, district organizations.
Estimated Number of Respondents:
300.
Estimated Number of Responses per
Respondent: 22.6.
Estimated Number of Responses:
6,782.
Estimated Total Annual Burden
(hours) on Respondents: 17,241.
Copies of this information collection
may be obtained from Susan Woolard,
Regulatory Division, Rural Development
Innovation Center, U.S. Department of
Agriculture, 1400 Independence Ave.
SW, Stop 1522, Washington, DC 20250;
telephone: 202–720–9631; email:

VerDate Sep<11>2014

17:41 Dec 08, 2021

Jkt 256001

[email protected]. All responses
to this information collection and
recordkeeping notice will be
summarized and included in the request
for OMB approval. All comments will
also become a matter of public record.
(b) Congressional Review Act
Pursuant to Subtitle E of the Small
Business Regulatory Enforcement
Fairness Act of 1996 (also known as the
Congressional Review Act or CRA), 5
U.S.C. 801 et seq., the Office of
Information and Regulatory Affairs in
the Office of Management and Budget
designated this action as a major rule, as
defined by 5 U.S.C. 804(2), because it is
likely to result in an annual effect on the
economy of $100,000,000 or more.
Accordingly, there is a 60-day delay in
the effective date of this action.
Application selection will not begin
until after February 7, 2022. Therefore,
the 60-day delay required by the CRA is
not expected to have a material impact
upon the administration and/or
implementation of the FSC program.
(c) National Environmental Policy
Act.
All recipients under this notice are
subject to the requirements of 7 CFR
part 1970. The Agency will review each
guaranteed loan application to
determine its compliance with 7 CFR
part 1970. The applicant may be asked
to provide additional information or
documentation to assist the Agency
with this determination.
(d) Non-Discrimination Statement.
In accordance with Federal civil
rights laws and U.S. Department of
Agriculture (USDA) civil rights
regulations and policies, USDA, its
Mission Areas, agencies, staff offices,
employees, and institutions
participating in or administering USDA
programs are prohibited from
discriminating based on race, color,
national origin, religion, sex, gender
identity (including gender expression),
sexual orientation, disability, age,
marital status, family/parental status,
income derived from a public assistance
program, political beliefs, or reprisal or
retaliation for prior civil rights activity,
in any program or activity conducted or
funded by USDA (not all bases apply to
all programs). Remedies and complaint
filing deadlines vary by program or
incident.
Program information may be made
available in languages other than
English. Persons with disabilities who
require alternative means of
communication to obtain program
information (e.g., Braille, large print,
audiotape, American Sign Language)
should contact the responsible Mission
Area, agency, or staff office; the USDA
TARGET Center at (202) 720–2600

PO 00000

Frm 00029

Fmt 4703

Sfmt 4703

(voice and TTY); or the Federal Relay
Service at (800) 877–8339.
To file a program discrimination
complaint, a complainant should
complete a Form AD–3027, USDA
Program Discrimination Complaint
Form, which can be obtained online at
https://www.ocio.usda.gov/document/
ad-3027, from any USDA office, by
calling (866) 632–9992, or by writing a
letter addressed to USDA. The letter
must contain the complainant’s name,
address, telephone number, and a
written description of the alleged
discriminatory action in sufficient detail
to inform the Assistant Secretary for
Civil Rights (ASCR) about the nature
and date of an alleged civil rights
violation. The completed AD–3027 form
or letter must be submitted to USDA by:
(1) Mail: U.S. Department of
Agriculture, Office of the Assistant
Secretary for Civil Rights, 1400
Independence Avenue SW, Washington,
DC 20250–9410; or
(2) Fax: (833) 256–1665 or (202) 690–
7442; or
(3) Email: [email protected].
USDA is an equal opportunity
provider, employer, and lender.
Karama Neal,
Administrator, Rural Business—Cooperative
Service, Rural Development.
[FR Doc. 2021–26693 Filed 12–8–21; 8:45 am]
BILLING CODE 3410–XY–P

DEPARTMENT OF COMMERCE
Foreign-Trade Zones Board
[B–58–2021]

Foreign-Trade Zone (FTZ) 43—Battle
Creek, Michigan; Authorization of
Production Activity; Pfizer, Inc.;
(mRNA COVID–19 Vaccine);
Kalamazoo, Michigan
On August 6, 2021, Pfizer, Inc.
submitted a notification of proposed
production activity to the FTZ Board for
its facility within Subzone 43E, in
Kalamazoo, Michigan.
The notification was processed in
accordance with the regulations of the
FTZ Board (15 CFR part 400), including
notice in the Federal Register inviting
public comment (86 FR 46177, August
18, 2021). On December 6, 2021, the
applicant was notified of the FTZ
Board’s decision that no further review
of the activity is warranted at this time.
The production activity described in the
notification was authorized, subject to
the FTZ Act and the FTZ Board’s
regulations, including Section 400.14.

E:\FR\FM\09DEN1.SGM

09DEN1