(F) other information determined appropriate by the Board.

(2) Submission and consideration

An eligible entity that desires to receive a line of credit under sections 2007a to 2007e of this title shall submit an application to the Board at such time, in such form, and containing such information and documentation, including a description of the areas to be served, as the Board shall prescribe under paragraph (1), and the Board shall consider each such application based on the requirements of sections 2007a to 2007e of this title. (3) Eligible entity

(A) Matching funds or letters of intent

In order for an application to be considered for approval by the Board for a line of credit, each eligible entity that submits an application shall

(i) certify in writing that the entity shall use such funds as part of a revolving fund to invest in, and make or guarantee loans to, local businesses in accordance with sections 2007a to 2007e of this title; and

(ii)(I) agree to provide matching funds (Federal funds shall not be used to satisfy such matching requirement) in amounts that are at least equal to the amount of the line of credit to be provided by the Board, that shall be in the form of

(aa) cash or cash equivalents; or

(bb) letters of credit in favor of the eligible entity issued or submitted by depository institutions (as defined in section 1813(c)(1) of title 12), insurance companies, similar Federally regulated financial institutions, State owned banks, local or State government or private philanthrophic foundations, as determined appropriate and acceptable by the Board; or

(II) demonstrate, through procedures determined appropriate and acceptable by the Board, that depository institutions (as so defined) or community development credit unions described in section 2007b(a) of this title, are prepared to participate with the eligible entity in a loan, guarantee, or investment program for the benefit of local businesses, and that the total financial commitment demonstrated by the letters of intent or other documents is at least equal to the value of the line of credit for which the eligible entity is applying.

(B) Exception for certain eligible entities

(i) Low per capita income areas

If the average per capita income level of the identified rural areas served by an eligible entity is less than 70 percent of the national average per capita income for the most recent year for which such information is available, such eligible entity shall only be required to match 50 percent

'So in original. Probably should be "philanthropic".

§ 2007c

of the funds provided by the Board in the same manner as described in subclause (I) or (II) of subparagraph (A)(ii). A list of the average per capita income and population of each county in the United States that contains rural areas, and the national average per capita income for such year, shall be published in the Federal Register and otherwise made available by the Board to the public.

(ii) Indian tribal council participation (I) In general

Community or tribal development corporations operated by Federally recognized tribal councils that desire to administer a local revolving fund may participate in the program established under sections 2007a to 2007e of this title if such corporations meet the rules and procedures established under sections 2007a to 2007e of this title that are determined by the Board to be pertinent.

(II) Establishment of special rules and procedures

(aa) In general

Not later than 220 days after November 28, 1990, the Board shall establish rules and procedures to enable such community or tribal development corporations serving rural areas located on Federally recognized reservations (including former reservations in Oklahoma) to participate in the program established under sections 2007a to 2007e of this title through the operation of revolving funds used for investing in, and making or guaranteeing loans to, new or expanding local businesses.

(bb) Contents

Rules and procedures established under item (aa) shall be established to ensure that development corporations that receive Federal lines of credit under sections 2007a to 2007e of this title serve needy reservation areas, including areas that have low per capita income, high unemployment, high poverty rates, depressed or lagging local economies, and other factors determined appropriate by the Board. (III) Matching requirements

The requirements of subsection (c)(3) of this section and section 2007d(d) of this title concerning the provision of matching funds and the requirement of partnerships for loans, and any related matching requirements, shall not apply to the development corporations receiving assistance under this clause. (4) Reapplication for lines of credit (A) In general

An eligible entity that has received a line of credit under this section may reapply in subsequent years for additional lines of

(A) demonstrate its ability or potential capacity to make sound business, lending, and investment decisions and to provide business counseling and technical assistance;

(B) demonstrate its ability to operate consistent with the requirements of sections 2007a to 2007e of this title and to increase the availability of credit in rural areas to promote the creation or expansion of viable businesses in rural areas;

(C) identify the proposed service area and define a strategy for serving that area that should describe such characteristics as similar industrial, labor, or other markets, similar geographic or socioeconomic conditions, or other related considerations, and, to the extent that such area includes any towns or townships, make a commitment to serve such towns or townships in their entirety;

(D) provide an assurance that its service area will consist of—

(i) all rural areas in a county if the median household income of the county is less than the Statewide nonmetropolitan median household income; or

(ii) identified rural areas in a county if— (I) the median household income of the county is not less than the Statewide nonmetropolitan median household income; and

(II) the median household income of each rural city, town, or township to be served, and of each separate contiguous rural area to be served, is less than the Statewide nonmetropolitan median household income;

(8) Geographic spread (A) In general

In awarding lines of credit under this section the Board shall attempt, as much as reasonably practicable and consistent with sound financial judgment, to assure that all rural regions of the United States benefit from such awards.

(B) Minimum amount of funds

After considering the availability of qualified applications, and if consistent with good investment practices and the other requirements of sections 2007a to 2007e of this title, the Board shall approve the application of at least one eligible entity in each State selected under section 2007(b)(1) of this title. The Board shall, to the maximum extent practicable and appropriate, ensure that eligible entities that are approved by the Board in any given State receive at least $750,000 (per State) out of the funds provided under subsection (d) of this section. In addition, to the maximum extent practicable the Board shall approve the applications of at least two eligible entities in each State containing an approved eligible entity.

(C) Maximum amount of funds

The total amount of funds provided under sections 2007a to 2007e of this title to eligible entities in any State shall not exceed $10,000,000.

(D) Special program

(i) In general

The Board shall issue regulations to establish a program that targets the benefits of the Federal lines of credit provided under this section to those rural areas and residents with special needs.

(ii) Limits

If consistent with sound investment practices, not less than 5 percent, nor more than 15 percent, of the funds appropriated under subsection (d) of this section shall be issued to eligible entities that will serve

(I) local businesses located in very distressed rural areas, as defined by the Board, that may include areas with special needs arising from actual or threatened severe unemployment which results from economic dislocation; and

(II) local businesses that provide beneficial services to rural residents such as improved medical, hospital, or health care, licensed day care facilities or centers, improved services for the handicapped, the disabled, the elderly or other needy individuals, improved educational opportunities, improved public transportation services for needy individuals, or other related services as determined appropriate by the Board. (d) Limitation on authorization of appropriations To carry out sections 2007a to 2007e of this title, there are authorized to be appropriated to the Rural Fund and the Board $10,000,000 for

fiscal year 1992, $8,600,000 for fiscal year 1993, $6,700,000 for fiscal year 1994, and $4,700,000 for each of fiscal years 1995 and 1996. Amounts appropriated under this subsection shall remain available until expended or until the Board is terminated.

(e) Relocation and refinancing

The Board shall establish rules and procedures to prohibit eligible entities from using the assistance received under sections 2007a to 2007e of this title for loans and investments, or for issuing guarantees, that would

(1) facilitate the relocation of a local business from one community to another;

(2) refinance the existing debt of a local business, except that such refinancing may be undertaken with such assistance if it is undertaken in conjunction with a substantial expansion effort by the local business; or

(3) significantly reduce the viability of a then existing business engaged in substantially the same business activities in the same community.

(Pub. L. 101-624, title XXIII, § 2313, Nov. 28, 1990, 104 Stat. 3986; Pub. L. 102-237, title VII, § 702(c), Dec. 13, 1991, 105 Stat. 1880.)

CODIFICATION

Section was enacted as part of the Rural Economic Development Act of 1990, and also as part of the Food, Agriculture, Conservation, and Trade Act of 1990, and not as part of the Consolidated Farm and Rural Development Act which comprises this chapter.

AMENDMENTS

1991-Subsec. (a)(2). Pub. L. 102-237, § 702(c)(1), substituted "Rural Business Investment Fund” for "Fund established under paragraph (1)”.

Subsec. (b)(1). Pub. L. 102-237, § 702(c)(2), substituted "Rural Business Investment Fund" for "fund established by subsection (a)".

Subsec. (c)(6). Pub. L. 102-237, § 702(c)(3), inserted "Business Investment" before "Fund" in introductory provisions.

EFFECTIVE Date of 1991 AMENDMENT

Amendment by Pub. L. 102-237 effective as if included in the provision of the Food, Agriculture, Conservation, and Trade Act of 1990, Pub. L. 101-624, to which the amendment relates, see section 1101(b)(7) of Pub. L. 102-237, set out as a note under section 1421 of this title.

EFFECTIVE DATE

Section effective Oct. 1, 1991, see section 2007(d) of this title.

SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 2007, 2007a, 2007b, 2007d, 2007e of this title.

§ 2007d. Local revolving funds

(a) Establishment

(1) In general

Each eligible entity approved by the Board to participate in the program established under sections 2007a to 2007e of this title shall establish a local revolving fund account in which to deposit

Each local revolving fund established under this subsection may be established in one or more member banks of the Federal Reserve System, any Federally insured State nonmember bank (as defined in section 1813(b) of title 12), or any State owned bank whose deposits are backed by the full faith and credit of the State, and the funds, except as provided in subsection (b) of this section, shall be held in cash and receive interest or be invested in direct obligations of the United States or in obligations guaranteed by the United States or an agency thereof.

(b) Use of fund

Amounts in a local revolving fund may be used

(1) to provide loans or equity capital, or loan guarantees, to approved local businesses as authorized in sections 2007a to 2007e of this title, under procedures established by the Board;

(2) to cover the costs of providing training, business or financial planning, or management or technical assistance to approved local businesses in amounts that do not exceed amounts or levels described in standards established by the Board;

(3) if financial investments are made in the eligible entity, in accordance with item (aa) or (bb) of section 2007c(c)(3)(A)(ii)(I) of this title, to provide for a return of capital to nonFederal investors in the revolving fund, except that if such revolving fund experiences capital or other losses the share of returned capital under this paragraph shall be proportionately, or otherwise appropriately reduced to reflect such losses, under procedures established by the Board; or

(4) to cover reasonable operating or capital expenses, losses, or for other charges as prescribed in rules or standards established by the Board.

(c) Decisions concerning funding

Eligible entities that receive a line of credit under section 2007c of this title shall make case-by-case determinations concerning applications submitted by each local business for loans, equity capital, or loan guarantees, under general procedures and requirements established by the Board.

(d) Requirement of partnerships for loans or investments

Funds in each local revolving fund shall be loaned, invested, or used to provide a guaran

tee, only if one or more depository institutions (as defined in section 1813(c)(1) of title 121 or community development credit unions described in section 2007b(a) of this title, under procedures established by the Board, match each investment or loan made by each such revolving fund to each such local business, on at least a dollar-for-dollar basis, or provide the funds for the loans that are guaranteed by such local revolving fund.

(e) Investment size limits

(1) In general

(A) Amount per local business

The amount of Federal funds provided from any revolving fund for use in making loans or investments, or available regarding each guarantee, shall not exceed $250,000 in any given calendar year, to any single approved local business or to other local businesses that are financially connected or otherwise related to such local business as defined by the Board.

(B) Other sources

Sections 2007a to 2007e of this title shall not be construed to limit the total amount of loans, investments, or guarantees that each local business may receive from sources other than eligible entities.

(C) Procedures

In implementing this paragraph the Board shall develop procedures to establish, impute, or determine the amount of Federal funds that shall be considered available in the revolving funds created by approved eligible entities.

(2) Ineligibility

Any local business that employs 100 or more employees shall not be eligible to receive assistance from a local revolving fund that receives assistance under sections 2007a to 2007e of this title.

(f) Subordinated interest of local revolving fund If a depository institution (as defined in section 1813(c)(1) of title 121 or a community development credit union described in section 2007b(a) of this title has made an investment or loan in a local business in conjunction with an investment or loan made out of the revolving fund of an approved eligible entity, the amount invested or loaned by such revolving fund in such local business may be subordinated to any degree and in any manner.

(g) Other investors

A depository institution (as defined in section 1813(c)(1) of title 12, community development credit union described in section 2007b(a) of this title, similar Federally regulated financial institution, State owned bank, local or State government, private philanthrophic 2 founda

'So in original. Probably should be followed by a closing parenthesis.

* So in original. Probably should be "philanthropic".

tion, or other entity that contributes capital to an eligible entity that receives Federal assistance under sections 2007a to 2007e of this title may establish contractual arrangements with such eligible entity concerning the return of #such investments in the local revolving fund consistent with subsection (b)(3) of this section. (h) Additional capital

The Board shall promulgate regulations that provide each participating eligible entity with a sufficient amount of time to obtain additional capital, lines of credit, or letters of intent, if any investor, pursuant to the contract with the eligible entity under subsection (g) of this section, withdraws some or all of its investment. (i) Continuation of line of credit

A line of credit provided to an approved eligible entity under section 2007c of this title for use in a local revolving fund shall be available to be drawn upon until the Investment Board is terminated or until the line of credit is canceled, revoked, or suspended by the Board or the Secretary as described in section 2007e of this title or subsection (1) of this section. (j) Continuation of business promotion activities

The Federal assistance provided to any eligible entity under sections 2007a to 2007e of this title shall become the property of such entity on the termination of the Investment Board if

(1) the Board determines that the eligible entity that administers the local revolving fund has operated the fund in a manner that is consistent with sections 2007a to 2007e of this title; and

(2) the eligible entity contracts with the Secretary to continue to provide lending, investment, and guarantee assistance consistent with sections 2007a to 2007e of this title. (k) Development of monitoring procedures

On and after the date on which the Investment Board is terminated, the Secretary shall act in place of the Board and shall monitor the operations of eligible entities that receive Federal assistance under sections 2007a to 2007e of this title which continue to exist on such date. (1) Refund of funds

Notwithstanding subsection (j) of this section, and in addition to any actions taken under section 2007e of this title, if the Secretary finds that the purpose of any eligible entity is no longer to promote business development in a manner consistent with sections 2007a to 2007e of this title, the Secretary shall revoke the approval of the eligible entity, obtain a refund in an amount equal to the amount of funds drawn out of the Federal line of credit issued to the eligible entity together with an appropriate amount of interest on such amount, as determined by the Secretary, and succeed to, or acquire the rights, privileges, and assets, investments of, and the payments due from such eligible entity, as described in section 2007e(h) of this title.

(m) Annual reports to Board

(1) In general

Each eligible entity that receives assistance under sections 2007a to 2007e of this title

shall annually prepare and submit to the Board, at such time and in such form as the Board may require, a report describing the financial condition of the eligible entity, and the investments, cash revenues, income from investments, loans made, equity positions taken, guarantees issued, losses sustained or taken, any training, business, or technical assistance, or financial planning provided, operating expenses, loss rates, and such other matters as the Board determines appropriate concerning the eligible entity.

(2) Post termination

After the Board terminates under subsection (n) of this section, the reports required under paragraph (1) shall be submitted to the Secretary who shall stand in the same position as the Board.

(n) Termination of Board

The Investment Board established by section 2007b(a) of this title shall terminate on the last day of the 5th calendar year following November 28, 1990, and on and after November 28, 1990, the Secretary shall act in place of such Board.

(Pub. L. 101-624, title XXIII, § 2314, Nov. 28, 1990, 104 Stat. 3991; Pub. L. 102-237, title VII, § 702(d), Dec. 13, 1991, 105 Stat. 1880.)

CODIFICATION

Section was enacted as part of the Rural Economic Development Act of 1990, and also as part of the Food, Agriculture, Conservation, and Trade Act of 1990, and not as part of the Consolidated Farm and Rural Development Act which comprises this chapter.

AMENDMENTS

1991-Subsec. (a)(1)(A)(i). Pub. L. 102-237 substituted "under sections 2007a to 2007e of this title from the Rural Business Investment Fund" for "from the Fund under sections 2007a to 2007e of this title".

EFFECTIVE DATE OF 1991 AMENDMENT Amendment by Pub. L. 102-237 effective as if included in the provision of the Food, Agriculture, Conservation, and Trade Act of 1990, Pub. L. 101-624, to which the amendment relates, see section 1101(b)(7) of Pub. L. 102-237, set out as a note under section 1421 of this title.

EFFECTIVE DATE

Section effective Oct. 1, 1991, see section 2007(d) of this title.

SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 2007, 2007a, 2007b, 2007c, 2007e of this title.

§ 2007e. Compliance and enforcement

(a) Revocation or cancellation of line of credit and refund

(1) Grounds for revocation

The Board shall revoke or suspend a line of credit, and shall request a full or partial refund of the Federal investment, with an appropriate amount of interest

(A) for false statements knowingly made in any written statement required under sections 2007a to 2007e of this title, or