7 CFR Part 4280 · GlobalLawDB

Contents

Subpart A · Subpart A—Rural Economic Development Loan and Grant Programs

4280.1Purpose.#

The Rural Economic Development Loan (REDL) and Grant (REDG) Programs provide financing to eligible Rural Utilities Service (RUS) electric or telecommunications borrowers (Intermediaries) to promote rural economic development and job creation projects.

4280.100OMB control number.#

The information collection requirements contained in this regulation have been approved by the Office of Management and Budget (OMB) and have been assigned OMB control number 0575-0035. A person is not required to respond to this collection of information unless it displays a currently valid OMB control number.

4280.13Applicant eligibility.#

Applicants that are not delinquent on any Federal debt or otherwise disqualified from participation in these Programs are eligible to apply. An applicant must be eligible under 7 U.S.C. 940c.

4280.14[Reserved]#

4280.15Ultimate Recipient Projects eligible for Rural Economic Development Loan funding.#

An Intermediary may receive REDL funds only when it has a pre-approved Ultimate Recipient and Project that have an immediate need for the Zero-Interest Loan. REDL funds may only be used by the Intermediary to make a Zero-Interest Loan to the Ultimate Recipient to finance financially viable economic development or job creation Projects in a Rural Area. Funds may only be used to provide the following assistance:

(a)Start-Up Venture costs, including, but not limited to financing fixed assets such as real estate, buildings (new or existing), equipment, or working capital;

(b)Business expansion;

(c)Business Incubators;

(d)Technical Assistance;

(e)Project feasibility studies;

(f)Advanced Telecommunications services and computer networks for medical, educational, and job training services;

(g)Other Projects eligible under § 4280.21; or

(h)Community Facilities Projects.

(i)A borrower is permitted to use up to 10 percent of the amount provided under this subpart to construct, improve, or acquire broadband infrastructure related to the project financed, subject to the requirements of 7 CFR part 1980, subpart M.

4280.16REDL and REDG Loan terms.#

REDL and REDG loans made by the Intermediary are governed by the following terms:

(a)The maximum term of a loan is 10 years, including any principal deferment period. The Intermediary may choose a shorter term if desired.

(b)Deferments on Zero-Interest Loans will automatically be granted by Rural Development upon request of the Intermediary as follows:

(1)A deferral for up to 1 year for Projects involving an Established Operation; or

(2)A deferral for up to 2 years for Projects involving a Start-Up venture or a Community Facilities Project whether or not such Project also receives funding under USDA Community Facilities funding programs.

(c)The Intermediary must provide the Ultimate Recipient with the same loan terms as the Intermediary receives from Rural Development.

(d)The Intermediary is solely responsible for the financial approval of Fund loans and all other Fund decisions and actions.

4280.17Additional REDL terms.#

(a)The Intermediary is responsible for fully repaying the Zero-Interest Loan to RBS even if the Ultimate Recipient does not repay the Intermediary.

(b)The Intermediary is responsible for remitting any partial or full payment to RBS at the time the Ultimate Recipient pays the Intermediary.

(c)Unless deferred pursuant to § 4280.16(b) of this subpart, loan payments to Rural Development under the REDL Program are due monthly.

(d)If the Intermediary does not have an outstanding loan with RUS, the Intermediary must immediately provide, as security for any REDL loan it receives, a Rural Development-approved irrevocable letter of credit that remains in effect until the loan is repaid.

4280.18[Reserved]#

4280.19REDG Grants.#

Intermediaries receiving Grants must partially finance a Revolving Loan Fund that the Intermediary will operate and administer, by providing supplemental funds of at least 20 percent of the Grant. Grants are subject to 2 CFR parts 200, 400, 415, 417, 418, 421 as applicable.

4280.2Policy.#

(a)REDL Program. REDL Zero-Interest Loans are made to Intermediaries, to relend, at a zero-interest rate, to Ultimate Recipients. Ultimate Recipients are responsible for repayment to the Intermediary. The Intermediary must transmit Ultimate Recipient loan repayments to Rural Development.

(b)REDG Program. Grants are made to Intermediaries to establish Revolving Loan Funds. REDG Zero-Interest Loans are made by the Intermediary from the Revolving Loan Fund to Ultimate Recipients for the purpose of financing specific, approved Projects. Ultimate Recipients are responsible for repayment to the Intermediary. The Ultimate Recipient's loan repayments are to be retained in the Revolving Loan Fund, which is maintained by the Intermediary, to finance other rural economic development Projects. Only the initial loan made by the Intermediary from the Revolving Loan Fund has to be at zero interest.

4280.20[Reserved]#

4280.21Eligible REDG Ultimate Recipients and Projects.#

The Intermediary may only make loans from the Revolving Loan Fund to entities located in a Rural area of a State. Eligible entities are as follows:

(a)Non-profit entities, public bodies, or Federally-recognized Indian tribes Ultimate Recipients for:

(1)Community development or Community Facility Projects that:

(i)will create or save employment; and

(ii)are open to and serve all Rural residents, and are owned by the Ultimate Recipient;

(2)Business Incubators;

(3)Facilities and equipment to provide education and training to residents of Rural Areas that will facilitate economic development;

(4)Facilities and equipment to provide medical care to residents of Rural Areas. Equipment and facilities may be funded to enable eligible entities to provide medical training and related professional health care skills to rural health care providers;

(5)Projects that utilize Advanced Telecommunications or computer networks to facilitate medical or educational services or job training; or

(6)Project feasibility studies and Technical Assistance. A qualified Independent Provider must perform feasibility studies or Technical Assistance.

(b)For-profit Ultimate Recipients for Projects under paragraphs (a)(3), (4), (5), or (6) of this section.

4280.22[Reserved]#

4280.23Requirements for lending from Revolving Loan Fund.#

(a)Supplemental contribution. The Intermediary must establish a Revolving Loan Fund and contribute an amount equal to at least 20 percent of the Grant. The supplemental contribution must come from Intermediary's funds which may not be from other Federal Grants, unless permitted by law.

(b)Use of supplemental contribution. The Intermediary's contribution will only be used to make REDG loans and not other investment purposes. The Intermediary's contribution must remain a permanent part of the Revolving Loan Fund until the Fund is terminated.

(c)REDG Zero-Interest Loan Requirements. The Fund is made up of Rural Development and Intermediary contributions and must be loaned in accordance with one of the following 2 options:

(1)The contribution may be used to fund the same Project that Rural Development is funding. The interest rate on that portion of the financing using Rural Development funds will be at zero percent. The interest rate on that portion of the financing using the Intermediary's contribution may be greater than zero percent but must be less than, or equal to, the prevailing prime rate. Using this option, loan security and recovery of loan losses must provide for the pro rata recovery and distribution between the Intermediary and Rural Development based on the respective amounts of each contribution to the total loan amount for the Project.

(2)The Intermediary's contribution may be used to fund Projects separate from the Project financed with Rural Development funds, provided that the Project is eligible in accordance with § 4280.21.

(3)Whether the Intermediary chooses the option under paragraph (c)(1) or paragraph (c)(2) of this section, its contribution must be used to fund an eligible Project within 3 years from the date of the Grant agreement. If the Intermediary fails to use its contribution within this 3-year period, Rural Development will terminate the Grant.

(d)Intermediary's supplemental funds. Once revolved, monies from the Fund may be loaned at an interest rate called for in the Revolving Loan Fund Plan, not to exceed the prevailing prime rate.

(e)Eligible purposes only. Until the total amount in the Fund has been loaned, all loans must be made for eligible purposes as stated in § 4280.21. After the Fund has been loaned, in accordance with § 4280.21 of this subpart, the Intermediary shall make loans to finance rural economic development purposes in accordance with the Revolving Loan Fund Plan. All loan repayments, including interest earned, must be deposited into the Fund.

(f)Termination for cause. Rural Development will terminate the Fund and require repayment of the Grant funds if Rural Development determines that the Fund is not being operated according to the approved Revolving Loan Fund Plan, this subpart, or for other good cause determined by Rural Development, such as questionable prepayment of initial loans. As applicable, Rural Development will follow remedies for noncompliance, closeout and post-closeout adjustments and continuing responsibilities in accordance with 2 CFR 200.338-200.344 as codified by 2 CFR 400.1.

(g)All REDG Loans must be made to Rural Ultimate Recipients.

4280.24Revolved funds.#

Rural Development and the Intermediary's supplemental funds will be considered revolved after they have been loaned to Ultimate Recipients and subsequently repaid. Loans made from revolved funds will not require prior approval of Rural Development for creditworthiness or environmental clearance purposes. All other Federal compliance requirements, including those in this subpart, remain in effect.

4280.25Revolving Loan Fund Plan.#

Each REDG Intermediary must adopt a Rural Development-approved plan that specifies that:

(a)The initial loan made from the Fund will be at zero percent interest and have a maximum term of 10 years;

(b)Loans made from loan repayments may carry an interest rate less than, or equal to, the prevailing prime rate. The Intermediary determines repayment terms and security arrangements on these loans.

(c)Loans made from repayments of REDG loans must be for eligible Program purposes;

(d)The Intermediary is solely responsible for the financial approval of Fund loans and all other Fund decisions and actions; and

(e)No changes will be made to a Rural Development-approved Revolving Loan Fund Plan without the prior written approval of Rural Development.

4280.26Administration and operation of the Revolving Loan Fund.#

(a)The Intermediary will operate and administer the Revolving Loan Fund. The Intermediary may contract with a third party for administrative services regarding the Fund. However, the Intermediary must permanently retain all Project review, approval, and monitoring authority and responsibility. This authority and responsibility cannot be delegated to any other person or entity.

(b)Up to 10 percent of Rural Development Grant funds may be applied toward operating expenses over the life of the Fund. Operating expenses include the costs of administering the Fund and Technical Assistance provided to Project owners by Independent Providers.

(c)In cases where the Intermediary uses its supplemental contribution to the Revolving Loan Fund for a Project other than the Project that resulted in the Intermediary being awarded the Grant, the loan terms must not exceed 10 years and the interest rate must be less than, or equal to, the prevailing prime rate.

4280.27Ineligible purposes.#

Zero-Interest Loans may not be used:

(a)For activities that would adversely affect the environment, or activities that limit the choice of reasonable alternatives prior to satisfying Rural Development environmental requirements;

(b)To pay off or refinance any existing indebtedness or costs of the Project that were incurred prior to Rural Development receipt of the Intermediary's completed application;

(c)For any electric or telecommunications purpose or for the Intermediary's electric or telecommunications operations, for affiliated operations of the Intermediary, or for the benefit of other Intermediaries or their affiliated operations, except those purposes contained in § 4280.15(f);

(d)To pay the salaries of any employee or owner of the Intermediary, its subsidiaries, or affiliates, except for salaries incurred in administering a Revolving Loan Fund established under the REDG Program;

(e)For community antenna or cable television systems or facilities;

(f)For residential purposes such as residential dwellings and land sites; facilities to provide entertainment television; to transfer property between owners without making improvements that will promote or sustain economic development in Rural Areas; or for personal, non-business related vehicles;

(g)Where there is directly or indirectly a conflict of interest or the appearance of a conflict of interest in the Project; for Intermediaries this would include a situation in which the Intermediary, its officers, managers, Board of Directors, employees, their spouses, children, or close relatives, have a financial or ownership interest in the Project being funded, including its construction or development;

(h)For any purpose when receipt of loan funds is conditioned upon the requirement that the Ultimate Recipient acquire electric or telecommunications service from the Intermediary or its affiliates;

(i)For any gambling activity;

(j)For a Project that would result in the transfer of existing employment or business activity more than 25 miles from its existing location;

(k)For proposed Projects located in areas covered by the Coastal Barrier Resources Act (16 U.S.C. 3501-3510);

(l)For any illegal activity or any activity involving prostitution;

(m)For Agricultural Production, except where the Project is a farmer-owned cooperative or similar organization where the benefits of the Project are passed on to the farmer-owners, and the Agricultural Production is part of an integrated business that processes the agricultural products, and the Agricultural Production portion of the loan will not exceed 50% of the loan amount;

(n)For any pass-through Grant funding activity (a Grant by the Intermediary to the Ultimate Recipient);

(o)Provision of only local exchange voice telephone service; or

(p)for any other purpose announced in a notice by Rural Development. This will not affect Grants that have already been awarded.

4280.28[Reserved]#

4280.29Supplemental financing required for the Ultimate Recipient Project.#

(a)For REDL loans, either the Ultimate Recipient or the Intermediary must provide supplemental funds for the Project equal to at least 20 percent of the loan to the Intermediary. For REDG grants, the Intermediary must provide supplemental funds, to capitalize the Revolving Loan Fund, equal to at least 20 percent of the Grant to the Intermediary.

(b)Funds provided by the Ultimate Recipient must be:

(1)Cash or its equivalent;

(2)Provided after Rural Development receives the completed application; and

(3)Disbursed for an eligible Project within a three year period that begins on the day the Intermediary signs the Grant agreement.

(c)Satisfactory evidence of the Ultimate Recipient's funds must be provided to Rural Development before it will advance any funds to the Intermediary.

4280.3Definitions.#

The following definitions are applicable to this subpart: Advanced Telecommunications. Using communications equipment for purposes, such as the simultaneous transmission of images and voice or the electronic transmission of data between multiple sites that do not consist primarily of providing local exchange voice or other routine communications. Agricultural Production. The cultivation, production, growing, raising, feeding, housing, breeding, hatching, or managing of crops, plants, animals, fish, or birds, either for fiber, food for human consumption, or livestock feed. Business Incubator. A facility in which small businesses can share premises, support staff, computers, software or hardware, telecommunications terminal equipment, machinery, janitorial services, utilities, or other overhead expenses, and where such businesses can receive Technical Assistance, financial advice, business planning services or other support. Community Facilities Project. An eligible community facility under the Community Facility Direct or Guaranteed programs. Conflict of interest. A situation in which a person or entity has competing personal, professional, or financial interests that make it difficult for the person or business to act impartially. Regarding use of both grant and matching funds, Federal procurement standards prohibit transactions that involve a real or apparent conflict of interest for owners, employees, officers, agents, their immediate family members, partners, or an organization which is about to employ any of the parties indicated herein, having a financial or other interest in or tangible personal benefit from the outcome of the project; or that restrict open and free competition for unrestrained trade. Specifically, project funds may not be used for services or goods going to, or coming from, a person or entity with a real or apparent conflict of interest, including, but not limited to, owner(s) and their immediate family members. Cushion of Credit. The amount contributed by the Intermediary pursuant to 7 U.S.C. 940c. Direct Job. A job that is created or saved by an Ultimate Recipient employer as a result of funding received from these Programs. Established Operation. An entity that has engaged in the nature of the Project for more than one year. Full-Time Job. A job for which a worker is scheduled to work 35 hours per week, or more, on a regular basis. Grant. For the REDG Program only; a transfer of monies other than a loan, from Rural Development to an Intermediary for specific use in funding a Revolving Loan Fund from which loans are made to Ultimate Recipients. Grant funds must be repaid by the Intermediary to Rural Development in the event the Fund is unused for more than one year, misused, no longer needed for its intended purposes, or the Grant is terminated. Independent Provider. An entity or individual, other than the Intermediary or the Ultimate Recipient that is not owned by a subsidiary or an affiliate of the Intermediary or Ultimate Recipient or would otherwise have an interest in the Intermediary or Ultimate Recipient that would be a conflict of interest or have the appearance of a conflict of interest. Indirect Job. A job that is created or saved as a result of a funded Project, but is not with the Ultimate Recipient. Infrastructure. Facilities required to support private sector economic activity such as: Highways, streets, roads, and bridges; public transit; water supply; wastewater treatment; water resources; solid waste; and hazardous waste services. Intermediary. An entity that is identified by RUS as an eligible borrower under the Rural Electrification Act and obtains a REDG Grant or a REDL Loan. Part-Time Job. A job for which a worker is scheduled to work less than 35 hours per week, on a regular basis. Programs. The Rural Economic Development Loan (REDL) and the Rural Economic Development Grant (REDG) Programs. Project. The facility, equipment, or activity of the Ultimate Recipient that is funded under one of the Programs. REDG. The Rural Economic Development Grant Program. REDL. The Rural Economic Development Loan Program. Revolving Loan Fund (or Fund). A revolving loan fund that is created with Grant funds and the Intermediary's supplemental contribution under the REDG Program that makes loans and uses the loan repayments and interest earnings to make subsequent loans until the Fund is terminated. Revolving Loan Fund Plan. A plan developed by the Intermediary and approved by Rural Development that governs the use of the Revolving Loan Fund. The plan must at least include a detailed explanation of the Intermediary's Fund administration policies and procedures and planned Fund use after the funds in the Revolving Loan Fund have revolved. Fund administration policies and procedures must at least include information regarding the review and approval of loans from the Fund. Rural area. This information will be taken from the most recent census data. Any area other than:

(1)A city or town that has a population of greater than 50,000 inhabitants;

(2)The urbanized area contiguous and adjacent to such a city or town; and

(3)Which excludes certain populations pursuant to 7 U.S.C. 1991(a)(13)(H) and (I). Rural Business-Cooperative Service (RBS). The Rural Business-Cooperative Service, an agency within the Rural Development mission area of the USDA. Rural Development. For purposes of this regulation, The Rural Business-Cooperative Service (RBS), an Agency of the United States Department of Agriculture, or a successor Agency, will be referred to as Rural Development. Rural Utilities Service (RUS). The Rural Utilities Service, an Agency within the Rural Development mission area of the USDA. Seasonal Job. A job whether Part-Time or Full-Time that begins and ends in accordance with a specified time period of less than a year and generally within a range less than four months. Start-Up Venture(s). An entity that has engaged in the nature of the Project for less than one year. An entity that has operated in excess of one year, but which is about to enter into a new line of business, would be considered a Start-Up Venture. State. Any of the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Marianas Islands, the Republic of Palau, the Federated States of Micronesia, and the Republic of the Marshall Islands. Technical Assistance. Managerial, financial and operational analysis and consultation by Independent Providers to assist Project owners in identifying and evaluating problems or potential problems and to provide training that enables Project owners to successfully implement, manage, operate and maintain viable Projects. Ultimate Recipient. An entity or individual that receives a loan from an Intermediary. The Ultimate Recipient may be a for profit or not-for-profit entity such as, but not limited to, a sole proprietorship, a corporation, a cooperative, a partnership, or a Limited Liability Company. The Ultimate Recipient may also be a public body, such as, but not limited to, a political subdivision of a State or locality, or a Federally-recognized Indian tribe. Uniform Act. The Uniform Relocation Assistance and Real Property Acquisition Act of 1970 (42 U.S.C. 4601-4655). USDA. The United States Department of Agriculture. Zero-Interest Loan. A loan made by the Intermediary to the Ultimate Recipient with no interest and which will be repaid to the Intermediary by the Ultimate Recipient.

4280.30Restrictions on the use of REDL or REDG funds.#

(a)Conflict of interest. The Intermediary must not own or manage any Ultimate Recipient Project, unless the Project is acquired as a result of servicing a loan made from the Revolving Loan Fund. Conflicts of interest and all appearances of a conflict of interest are not permitted. The intermediary must also disclose in writing any potential conflicts of interest to the USDA awarding agency and maintain written standards of conduct covering conflicts of interest, including organizational conflicts of interest in accordance with 2 CFR 400.2(b).

(b)Fees. The Intermediary may charge reasonable loan servicing fees, which are limited to one percent per year of the principal amount outstanding on the loan; reasonable professional service fees that are customary for the service being provided and in accordance with any standard fee schedules that have been established for the service; and reasonable expenses the Intermediary has incurred from Independent Providers.

(c)Interest earnings. Any interest earned by the Intermediary on advances of Rural Development REDG or REDL funds prior to the disbursement for the Project, must be returned to Rural Development.

4280.31-4280.35-4280.35 [Reserved]#

4280.36Other laws that contain compliance requirements for these Programs.#

(a)Equal employment opportunity. For all construction contracts and Grants in excess of $10,000, the contractor must comply with Executive Order 11246, as amended by Executive Order 11375, and as supplemented by applicable Department of Labor regulations (41 CFR part 60). The applicant is responsible for ensuring that the contractor complies with these requirements.

(b)Equal opportunity and nondiscrimination. Rural Development will ensure that equal opportunity and nondiscriminatory requirements are met in accordance with the Equal Credit Opportunity Act and 7 CFR part 15d, conducted by USDA. Rural Development will not discriminate against applicants on the bases of race, color, religion, national origin, sex, marital status, or age (provided that the applicant has the capacity to contract); to the fact that all or part of the applicant's income derives from public assistance program; or to the fact that the applicant has in good faith exercised any right under the Consumer Credit Protection Act.

(c)Civil rights compliance. Recipients of Grants must comply with the Americans with Disabilities Act of 1990, Title VI of the Civil Rights Act of 1964, and Section 504 of the Rehabilitation Act of 1973. This includes collection and maintenance of data on the race, sex, and national origin of the recipient's membership/ownership and employees. These data must be available to conduct compliance reviews in accordance with 7 CFR part 1901 subpart E, § 1901.204. Initial compliance reviews will be conducted with the Intermediary when Form RD 400-4, “Assurance Agreement,” is signed. For each loan or Grant an Intermediary receives, a new Form RD 400-4 must be completed. Each Ultimate Recipient must go through the same pre-award compliance review process and must also sign Form RD 400-4. For loans and Grants, a pre-award review is required before loan or Grant approval or any disbursement of funds. For Intermediaries, a post-award compliance review is required 90 days after closing the loan or Grant. This review is not required for Ultimate Recipients. Subsequent compliance reviews will be conducted 3 years from the date the post-award compliance review is completed for Intermediaries and 3 years from the date the pre-award compliance review is completed for Ultimate Recipients. Where Grant funds are used for a Revolving Loan Fund, compliance reviews are required for the Intermediaries for as long as the Fund is in operation. For Ultimate Recipients, compliance reviews are conducted until the loan is repaid to the Fund.

(d)Architectural barriers. All facilities financed with Zero-Interest Loans that are open to the public or in which persons may be employed or reside must be designed, constructed, or altered to be readily accessible to and usable by disabled persons. Standards for these facilities must comply with the Architectural Barriers Act of 1968 (42 U.S.C. 4151-4157) and the “Uniform Federal Accessibility Standards”, (41 CFR part 101-19.6, Appendix A).

(e)Uniform relocation assistance. Relocations in connection with these Programs are subject to 49 CFR part 24 as referenced by 7 CFR part 21 except that the provisions in title III of the Uniform Act do not apply to these Programs.

(f)Drug-free workplace. Grants made under these Programs are subject to the requirements contained in 2 CFR part 421 which implements the Drug-Free Workplace Act of 1988 (41 U.S.C. 8101 et seq.). An Intermediary requesting a REDG Grant will be required to certify that it will establish and make a good faith effort to maintain a drug-free workplace program.

(g)Debarment and suspension. The requirements of 2 CFR part 180 and Departmental Regulations 2 CFR part 417, Nonprocurement Debarment, and Suspension are applicable to these Programs.

(h)Intergovernmental review of Federal programs. These Programs are subject to the requirements of Executive Order 12372 (3 CFR 1982 Comp., p. 197) and 2 CFR part 415, subpart C, which implements Executive Order 12372. Proposed Projects are subject to the State and local government review process contained in 2 CFR part 415, subpart C.

(i)Restrictions on lobbying. The restrictions and requirements imposed by 31 U.S.C. 1352, and 2 CFR part 418, are applicable to these Programs.

(j)Earthquake hazards. These Programs are subject to the seismic requirements of the Earthquake Hazards Reduction Act of 1977 (42 U.S.C. 7701-7706).

(k)Environmental requirements. Actions taken under this subpart, including the loans made from the revolving loan fund using Agency funds, must comply with 7 CFR part 1970. However, revolving loan funds derived from repayments by third parties are not considered Federal financial assistance for the purposes of 7 CFR part 1970.

(l)Affirmative fair housing. If applicable, the Intermediary will be required to comply with the Affirmative Fair Housing Act (42 U.S.C. 3601-3631).

(m)Flood hazard insurance. These Programs are subject to the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973, as amended by 42 U.S.C. 4001-4129.

(n)Audits. These Programs are subject to 2 CFR part 200, subpart F, as codified in 2 CFR part 400.1.

4280.37Application forms and filing dates.#

(a)The Intermediary may obtain forms that supplement the written narrative sections of its application from the Rural Development State Office for the State where the Intermediary is located.

(b)An original copy only of the application is to be filed with the Rural Development State Office. No other copies are required.

4280.38Maximum amount of loans or Grants.#

During any given fiscal year, Rural Development will publish an announcement of available loan and Grant funds and will indicate the maximum loan and Grant amounts for which an Intermediary or prospective Intermediary may apply. This announcement will also include contact information and application deadlines. All pending applications on file at RBS, including both loan and Grant applications, from the same Intermediary or prospective Intermediary for the same Project will be considered to be one application in determining that the maximum size of the application is in accordance with this section.

4280.39Contents of an application.#

An application for a loan or a Grant must contain the following:

(a)Required forms and certifications:

(1)Standard Form 424, “Application for Federal Assistance,” signed by an authorized representative of the Intermediary.

(2)A Resolution of the Board of Directors signed by the directors and certified by the Intermediary's board secretary. The board resolution must indicate whether the Intermediary is requesting a loan or Grant, agree to the provisions of this subpart and the loan or Grant agreement including the Intermediary's 20 percent Fund contribution, and state that the Intermediary has the legal authority to enter into a loan or Grant agreement under these Programs;

(3)Form AD 1047, “Certification Regarding Debarment, Suspension, and other Responsibility Matters—Primary Covered Transactions,” and Form AD-1048, “Certification Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion—Lower Tier Transactions.”

(4)Assurance statement for the Uniform Act signed by the Ultimate Recipient. This statement provides Rural Development with the required assurance statement that any relocations of persons or acquisitions of real property, as part of completing the Ultimate Recipient Project, will be handled in accordance with this statute.

(5)RD Instruction 1940-Q, Exhibit A-1, applies if the loan is greater than $150,000 or the Grant is greater than $100,000;

(6)SF LLL, “Disclosure of Lobbying Activities,” (if the Intermediary or the Ultimate Recipient engages in lobbying activities);

(7)Form AD 1049, “Certification Regarding Drug-Free Workplace Requirements,” for Grants only;

(8)Seismic certification if construction of a building is proposed. The Project owner certifies that any building constructed will comply with standards that reduce the damage caused by earthquakes;

(9)Environmental documentation in accordance with 7 CFR part 1970.

(10)RUS Form 7, “Financial and Statistical Report” and RUS Form 7a “Investments, Loan Guarantees, and Loans,” or similar information.

(b)A written narrative section must be provided. This section consists of the following:

(1)A Project description, including details of the work to be performed with Rural Development funds, and a business plan, including a discussion of management and prior experience of the Ultimate Recipient.

(2)A discussion of how the Project meets each selection factor in § 4280.42(b).

(3)A Revolving Loan Fund Plan is required if the Intermediary is applying for a Grant to establish a Revolving Loan Fund.

4280.4-4280.12-4280.12 [Reserved]#

4280.40[Reserved]#

4280.41Environmental review of the application.#

The Agency will review the environmental documentation in accordance with 7 CFR part 1970. Intermediaries will be informed by the Agency if additional information is required from the intermediary to complete the environmental review process. The environmental review process must be completed before the application can be considered for approval by the Agency.

4280.42Application evaluation and selection.#

(a)Rural Development will evaluate the application and score it based on the selection factors in this section. All applications will be ranked on a nationwide basis, based on the total points scored.

(b)The application will be evaluated and scored using the information provided in accordance with § 4280.39(b)(2) of this subpart.

(1)Nature of the Project. Rural Development will award up to 60 points based on whether the Project:

(i)Is a for-profit business, Business Incubator, industrial building or park, or an infrastructure connection project (such as streets or utilities)—20 points;

(ii)Provides Technical Assistance to rural businesses or rural residents, or educates or provides medical care to rural residents—20 points;

(iii)Will enhance rural economic development by providing Advanced Telecommunications services and computer networks for medical, educational, and job training services. This review will be based on the application's telecommunications design—20 points.

(2)Number of direct full-time equivalent jobs created or saved within a 3-year period. To calculate full-time equivalent Direct-Jobs, count two part-time jobs as one full-time job or three part-time or seasonal jobs as one full-time job. If the total numbers of part-time and seasonal jobs add up to a fraction, round up to the next whole number after combining same. Indirect-Jobs or non-Rural jobs cannot be used for this calculation. If the number of Rural full-time equivalent direct-jobs jobs created or saved per $100,000 of total, Project cost is: Then RuralDevelopment will award: (i) Greater than five 25 points. (ii) From one to five 15 points.

(3)Supplemental funds for the Project. Points will be based on a calculation of the amount of supplemental funds to be provided to the Project. All supplemental funds used in the following calculation must be disbursed to the Project between the date of Rural Development receipt of the application and 1 year after the first advance of funds by Rural Development: If supplemental funds as a percentage of the Rural Development loan or grant to be provided to the Project are: Then RuralDevelopment will award: (i) Greater than 200% 20 points. (ii) From 100% to 200% 10 points. (iii) From 50% to less than 100% 5 points.

(4)Unemployment rate for the county(ies) where the Project is physically located. Rural Development will compare the current unemployment rate(s) in the county(ies) to the State and national unemployment rates, and, if applicable, award points under the following categories, whichever is greater: If the unemployment rate(s) in the county(ies) where the Project will be located: Then RuralDevelopment will award: (i) Exceeds the national unemployment rate by 30% or more 15 points. (ii) Is greater than the national unemployment rate, but exceeds it by less than 30% 5 points. (iii) Exceeds the State unemployment rate by 30% or more 10 points. (iv) Is greater than the State unemployment rate but exceeds it by less than 30% 5 points.

(5)Per capita personal income for the county(ies) where the Project is physically located. Rural Development will compare the per capita personal income in the county(ies) where the Project will be located to the national and State per capita personal income levels, and, if applicable, award points under the following categories, whichever is greater: If the per capita personal income level in the county(ies) is: Then RuralDevelopment will award: (i) Less than or equal to 90% of the national level 15 points. (ii) Between 90 and 100% of the national level 5 points. (iii) Less than or equal to 90% of the State level 10 points. (iv) Between 90 and 100% of the State level 5 points.

(6)Rural Area location. (i) If the Project is physically located in an incorporated city or town or equivalent having a population of 1,249 or less, or if it is physically located in an unincorporated area, Rural Development will award 20 points.

(ii)If the Project is physically located in an incorporated area having a population of 1,250 to 2500, Rural Development will award 10 points.

(7)Decline in population for the county where the Project is physically located. If there has been a decline in population in the county where the Project will be located over the time period covered by the two most recent decennial Censuses to the present (or equivalent time frame if using a data source other than the decennial Census), Rural Development will award 10 points.

(8)Cushion of Credit Payments. Rural Development will determine the level of Cushion of Credit Payments on deposit by the Intermediary, as follows: If the Intermediary's Cushion of Credit account level is: Then RuralDevelopment will award: (i) In excess of $300,000, or a dollar amount in excess of 3 percent of the Intermediary's total assets, whichever is less 15 points. (ii) Within the range of $100,000 to $299,999.99, or a dollar amount that is within the range of one percent to 2.99 percent of Intermediary's total assets, whichever is less 10 points. (iii) Within the range of $10,000 to $99,999.99, or a dollar amount that is within the range of 0.5 percent to .99 percent of Intermediary's total assets, whichever is less 5 points.

(9)Initial loan and Grant. If the loan or Grant application will result in the first award to an Intermediary under these Programs, Rural Development will award 10 points.

(10)County participation. If the Project will be the first REDLG Project financed in a county Rural Development will award 10 points.

(11)The business plan for the Applicant's Ultimate Recipient will be evaluated by Rural Development and must include:

(i)A description of the business or Project plans, its management, and, if applicable, its products and operating plans. (The business plan evaluated by Rural Development for Advanced Telecommunications will be its telecommunications and engineering design)—up to 15 points; and

(ii)An appropriate financial plan, including actual balance sheets and income statements covering the most recent 3-year period (for applicants who have been in business this long), and projected balance sheets, income statements, and cash flow statements for the ensuing 3-year period, supported by assumptions showing the basis for the projections—up to 20 points.

4280.43Discretionary points.#

The RBS Administrator has the discretion to designate up to 25 points (no more than 5 points for each of the following elements) based on whether the Project:

(a)Is located in a Rural Empowerment Zone, Rural Economic Area Partnership Zone, Rural Enterprise Community, or Champion Community;

(b)Is located in a county that has experienced the loss, removal, or closing of a major source or sources of employment in the last 3 years which causes an increase of 2 percentage points or more in the county's most recent unemployment rate compared with the same period immediately before the dislocation;

(c)Is located in a county that has experienced chronic or long-term economic deterioration;

(d)Is located in a county that was designated a disaster area by the President of the United States that significantly affected rural economic development and job creation. The county must have been designated within 3 years prior to filing of the completed application with Rural Development; or

(e)Is consistent with the Rural Development State Office's approved strategic plan and mission area objectives and is identified as a priority area for assistance in the States' plan.

4280.44Limitation on number of loans or Grants to an Intermediary.#

Depending on the amount of funds available, Rural Development may publish an announcement limiting an Intermediary to one selected Grant application and two selected loan applications in a fiscal year.

4280.45-4280.46-4280.46 [Reserved]#

4280.47Non-selection of applications.#

Provided the application requirements have not changed, an application not selected will be reconsidered in 3 subsequent funding competitions for a total of four funding competitions. If an application is withdrawn, it can be resubmitted and will be evaluated as a new application.

4280.48Post selection period.#

Rural Development will notify the Intermediary in writing if the application is selected. The documents to be executed by the Intermediary will include:

(a)For a loan:

(1)A Letter of Conditions with Project-specific terms and conditions;

(2)A loan agreement with general terms and conditions;

(3)A note covering the repayment terms of the loan; and

(4)A legal opinion concerning the authority of the Intermediary to engage in the Project.

(b)For a Grant:

(1)A Letter of Conditions with Project-specific terms and conditions;

(2)A Grant agreement with general terms and conditions; and

(3)A legal opinion concerning the authority of the Intermediary to participate in the Revolving Loan Fund and to engage in the Project.

4280.49[Reserved]#

4280.50Disbursement of Zero-Interest Loan funds.#

(a)For a REDL loan, Rural Development will disburse Zero-Interest Loan funds to the Intermediary in accordance with the terms of the executed loan agreement. All loan funds will be disbursed either as an advance to the Intermediary, in multiple advances, or as a reimbursement for eligible project costs, once the Intermediary has complied with Rural Development requirements.

(b)The Intermediary must provide to the Ultimate Recipient all loan funds that the Intermediary receives from Rural Development within one year of receiving them. If the Intermediary does not re-lend Rural Development funds within one year, the loan funds, and all interest earned on the loan funds, must be returned to the Agency.

(c)For a REDG loan, Rural Development will disburse Grant funds to the Intermediary in accordance with 2 CFR 200 as adopted by USDA in 2 CFR part 400 as applicable. Specifically, Rural Development will disburse the Grant funds in advance if the following requirements are met:

(1)The Intermediary has established written procedures that will minimize the time elapsing between the transfer of funds from Rural Development and their disbursement to the Ultimate Recipient;

(2)The management system of the Intermediary meets the requirements of 2 CFR part 200 as adopted by USDA in 2 CFR part 400, as applicable;

(3)All necessary supplemental funds for the Project have been obligated or committed to the Revolving Loan Fund; and

(4)The requests for cash advances made by the Intermediary are limited to the minimum amounts needed and timed to be in accordance with the actual immediate cash needs of the Ultimate Recipient for carrying out the Project.

4280.51-4280.52-4280.52 [Reserved]#

4280.53Loan payments.#

The Intermediary must make all REDL payments to Rural Development by electronic funds transfer or other means as specified in the loan documents.

4280.54Construction procurement requirements.#

Construction, including bidding and awarding of contracts, must be conducted in a manner that provides maximum open and free competition.

4280.55Monitoring responsibilities.#

(a)The Intermediary must monitor the Project to ensure that:

(1)Funds are used only for the approved purposes as specified in the legal documents;

(2)Disbursements and expenditures of funds are properly supported with certifications, invoices, contracts, bills of sale, or other forms of evidence, which are maintained on the premises of the Intermediary;

(3)Project time schedules are being met, projected work by time periods is being accomplished, and other performance objectives are being achieved; and

(4)The Project is in compliance with all applicable regulations.

(b)Rural Development may inspect and copy records and documents that pertain to the Project. The Intermediary must retain these records for the term of the Project loan plus 2 years. In addition, Rural Development may also perform Project site visits and reviews of the use of loan or Grant proceeds.

(c)Rural Development will review and monitor Grants in accordance with 2 CFR part 200, as adopted by USDA in 2 CFR parts 400, 415, 417, 418, and 421 as applicable.

4280.56Submission of reports and audits.#

(a)In addition to any reports and audits required by 2 CFR part 200 and subpart F as adopted by USDA in 2 CFR part 400, the Intermediary must submit the following monitoring reports to Rural Development:

(1)Loan. The Intermediary must submit Form RD 4280-1 “Survey of Recipients of Rural Economic Development Loan and Grant Program” to Rural Development on an annual basis until it no longer owes money to USDA under the REDLG Program.

(2)Grant (Revolving Loan Fund). The Intermediary must submit the Form RD 4280-1 to Rural Development on an annual basis until all projects financed with Rural Development Grant proceeds have been repaid or are otherwise retired, whichever occurs last. Thereafter, on a triennial basis until the fund is terminated, the Intermediary will submit to Rural Development the Form RD 4280-1, reporting on the activity of all loans made from the Revolving Loan Fund.

(b)If the Intermediary does not have an existing loan with RUS, the Intermediary will submit a copy of its annual audit to Rural Development within 90 days of its completion. All REDL audits must be conducted in accordance with Generally Accepted Government Auditing Standards or Generally Accepted Accounting Principles and REDG audits in accordance with 2 CFR part 200 as adopted by USDA in 2 CFR part 400.

(c)Rural Development may require Ultimate Recipients that receive loans financed with Grant funds provided under the REDG Program to submit annual audits to comply with Federal audit regulations. In accordance with 2 CFR part 200, as adopted by USDA in 2 CFR part 400, Ultimate Recipients that are nonprofit entities, or a State or local government, may be required to submit an audit subject to the threshold established in 2 CFR part 200, as adopted by in 2 CFR part 400.

4280.57-4280.61-4280.61 [Reserved]#

4280.62Appeals.#

An Intermediary may appeal any appealable adverse decision made by Rural Development that affects the Intermediary in accordance with 7 CFR part 11.

4280.63Exception authority.#

Except as specified in paragraphs (a) through (c) of this section, the RBS Administrator may, on a case-by-case basis, make exceptions to any requirement or provision of this subpart, if such exception is necessary to implement the intent of the authorizing statute in a time of national emergency or in accordance with a Presidentially-declared disaster, or when such an exception is in the best interests of the Federal Government and is otherwise not in conflict with applicable law.

(a)Applicant eligibility. No exception to applicant eligibility can be made.

(b)Project eligibility. No exception to project eligibility can be made.

(c)Rural area definition. No exception to the definition of rural area, as defined, can be made.

4280.64-4280.99-4280.99 [Reserved]#

Subpart B · Subpart B—Rural Energy for America Program—Grants for Renewable Energy Systems and Energy Efficiency Improvements

4280.101Purpose.#

This subpart contains the procedures and requirements for providing financial assistance under the Rural Energy for America Program (REAP) through grants to purchase and install a Renewable Energy System (RES) or make Energy Efficiency Improvements (EEI).

4280.102Organization of subpart.#

The information in this subpart is organized into six main topics.

(a)General information. Sections 4280.101 through 4280.119 discuss the purpose of the program, definitions, conflict of interest, and compliance with other laws and regulations.

(b)Eligibility information. Sections 4280.120 through 4280.129 discuss the eligibility requirements for the program. These sections include information on Applicant eligibility, Project eligibility, and the use of funds. See § 4280.122 for information about award amounts, Project Period, and Cost Sharing requirements.

(c)Application requirements information. Sections 4280.131 through 4280.139 discuss the requirements for submitting an application. These sections include information on what forms and other information are required for a complete application as well as the format of the application, the application submission deadline, and how to submit the application.

(d)Application processing information. Sections 4280.140 through 4280.149 discuss how the Agency processes applications. These sections include information on how applications are reviewed for eligibility, how applications are evaluated for merit, and how an Applicant can withdraw an application from consideration.

(e)Award information. Sections 4280.150 through 4280.159 discuss how the Agency makes awards. These sections include information about how applications are selected for funding, how Applicants are notified whether their applications have been selected for funding, how Applicants can resolve disputes regarding funding selections, and the requirements for an Applicant to accept an award and be approved as a Recipient of an award.

(f)Post-award information. Sections 4280.160 through 4280.161 discuss the reporting requirements for Recipients as well as monitoring procedures that the Agency will use.

(g)Other. (1) Sections 4280.162 through 4280.198 are reserved.

(2)Section 4280.199 includes the Office of Management and Budget (OMB) control number for reporting and recordkeeping requirements under this subpart.

4280.103Acronyms.#

(a)BESS Battery Energy Storage System.

(b)BTU British Thermal Unit.

(c)CFR Code of Federal Regulations.

(d)COI Conflict of Interest.

(e)CSP Concentrated Solar Power.

(f)EA Energy Audit.

(g)EEI Energy Efficiency Improvement.

(h)EV Electric Vehicle.

(i)FAA Financial Assistance Agreement.

(j)FFY Federal Fiscal Year.

(k)kW Kilowatts.

(l)kWh Kilowatt-Hours.

(m)LCFS Low Carbon Fuel Standard.

(n)LOC Letter of Conditions.

(o)MW Megawatts.

(p)MWh Megawatt-Hours.

(q)PV Photovoltaic.

(r)RES Renewable Energy System.

(s)RIN Renewable Identification Number (as issued under the Renewable Fuels Standard Program).

(t)SAM System for Award Management.

(u)UEI Unique Entity Identifier.

(v)U.S.C. United States Code.

(w)USDA United States Department of Agriculture.

4280.104Definitions.#

These are the definitions for terms used in this subpart. All defined terms used in this subpart are capitalized. Agency means the Rural Business-Cooperative Service, an agency of the United States Department of Agriculture, or a successor agency. Agricultural commodity means an unprocessed product of Farms, Ranches, nurseries forests, and natural and man-made bodies of water that the Agricultural Producer has cultivated, raised, or harvested with legal access rights. Agricultural Commodities include plant and animal products and their by-products, such as crops, forestry products, hydroponics, nursery stock, aquaculture, meat, on-Farm generated manure, and fish and seafood products. Agricultural Commodities do not include animals raised or sold as pets, such as cats, dogs, and ferrets. Agricultural producer means a For-Profit Organization that produces or has the legal right to harvest an Agricultural Commodity and meets one of the following ownership structures:

(1)A tribal corporation or other business entity wholly owned by an Indian Tribe. The tribal corporation or business is wholly owned by an Indian Tribe. The tribal corporation or business must participate in or oversee the day-to-day labor and/or management and field operations, whereby 50 percent or greater of their gross income is derived from the agricultural operations based on the most recent complete calendar year.

(2)100 percent ownership by an individual or an individual and their Immediate Family. The organization is 100 percent owned and operated by an individual or by an individual and their Immediate Family. All owners must participate in the day-to-day labor, management, and/or field operations of the organization. The majority-owner of the organization must derive at least 50 percent of their income from the agricultural operations. The income is based on the most recent complete calendar year. In the case of ownership by an individual and their spouse, the individual and their spouse are considered as one owner for the purpose of determining majority ownership. Anaerobic digester means a Renewable Energy System that uses animal waste or other Renewable Biomass and may include other organic substrates to produce digestate and Biogas that may be sold in a gaseous or compressed liquid state or used to produce thermal or electrical energy. Ancillary infrastructure means the supplementary components and systems that support a Renewable Energy System, such as energy storage that does not generate or save energy. Annual energy production means the measured annual output of energy produced by a Renewable Energy System as measured by a meter at the common point of electrical coupling (e.g., an inverter). It is typically reported using kWh or MWH as units of energy measurement. For example, 21,900 kWh/year will be produced by the solar photovoltaic system. Applicant means the legal entity submitting an application to participate in the competition for program funding. Battery energy storage system (BESS) means a device that uses rechargeable batteries to store electrical energy for later use. Bioenergy project means a Renewable Energy System that produces fuel, Biogas, thermal energy, or electric power from a Renewable Biomass source only. Biogas means gaseous fuel (including landfill and sewage waste treatment gas) derived from the degradation and decomposition of Renewable Biomass. Feedstock segregation is not a requirement given the Biogas is derived only from the degradation and decomposition of Renewable Biomass. Examples of acceptable Renewable Energy Biogas Projects may include: production of Biogas for conversion to electricity or heat; production of Biogas to pipeline quality renewable natural gas; production of Biogas to compressed natural gas used as a non-retail transportation or other fuel; or an upstream system that distributes existing Biogas to its initial point of sale. Byproduct means an incidental or secondary product, regardless of whether it has a readily identifiable commercial use or value, generated under normal operations of the proposed Project that can be reasonably measured and monitored. Commercially available means a domestic or foreign Renewable Energy System or Energy Efficiency Improvement, and their components, that meets all the following requirements:

(1)RES Simple Payback = (Project Cost) ÷ (dollar value of energy units replaced, credited, sold, or used and fair market value of Byproducts as applicable in a typical year).

(i)The value of energy replaced will be calculated based on the Applicant's historical energy consumption with actual average price paid for the energy replaced, as documented by 12 consecutive months of utility bills prior to the installation of the system. For the average price paid, the following charges must be excluded: fixed meter charge, demand charges, subsidy charges, and sales tax. In the case of Off-Grid Systems, the historical energy consumption must be documented through a written statement from the utility company that services the Project location that identifies the average price per kW hour for the 12-month period prior to installation.

(ii)The value of energy credited or sold will be calculated based on the amount of energy units to be credited or sold at the actual rate per unit, as documented in utility net metering or crediting policies and/or a Power Purchase Agreement.

(iii)The value of Byproducts produced by and used in the project or related enterprises must be documented at the fair market value to be received for the Byproducts in a typical year.

(iv)The calculation does not include any one-time benefits such as, but not limited to, construction and investment-related benefits, nor credits which do not provide annual income to the project, such as tax credits.

(2)EEI Simple Payback = (Project Cost) ÷ (dollar value of energy saved).

(i)Energy saved will be determined by subtracting the actual energy consumed from the historical energy consumed and converting the result to a monetary value using a constant value or price of energy.

(A)Actual energy used in the original building and/or Equipment, as applicable, prior to the EEI Project, must be based on the actual average annual total energy used in British thermal units (BTU) over the most recent 12, 24, 36, 48, or 60 consecutive months of operation, as documented in utility bills and summarized in the Energy Audit or Energy Assessment.

(B)Actual energy use after the EEI project has been in place for the original building and/or Equipment, as applicable, for 12 months post-installation of the EEI Project, to include the same input and output conditions.

(C)Value or price of energy must be the actual average price paid over the same time period used to calculate the actual energy used. When calculating the actual average price of energy, only include energy charges directly reduced by the unit of energy being replaced or saved. For the average price paid, the following charges must be excluded: fixed meter charge, demand charges, subsidy charges, and sales tax.

(ii)The EEI projects Simple Payback calculation does not allow Applicants to monetize EEI benefits other than the dollar amount of the energy savings the Agricultural Producer or Rural Small Business realizes as a result of the improvement. Small business means a business entity organized for profit that is independently owned and operated and that meets the definition of “business concern” located at 13 CFR 121.105 and meets the criteria located at 13 CFR 121.301(b) and (f) and meets the size threshold established by 13 CFR 121.201. Solar electric means the conversion of energy from sunlight into electricity either directly using photovoltaics (PV) or indirectly using concentrated solar power (CSP). Solar thermal means converting sunlight into heat for use in industry. State means 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 the Northern Mariana Islands, the Republic of Palau, the Federated States of Micronesia, and the Republic of the Marshall Islands. Used Equipment means any Equipment that has been used and is provided in an “as is” condition. Useful life means estimated durations of utility placed on the RES or EEI. Useful life estimations terminate at the point when assets are expected to become obsolete, require major repairs, or cease to deliver economical results. The Agency determines the useful life of the RES or EEI based on the technology type and system components. Wind energy means a Renewable Energy System that harnesses the power of the wind to generate electricity.

(3)Taking an existing wind turbine and installing newly designed blades to enhance energy production; Rural or Rural area means any area of a State not in a city or town that has a population of more than 50,000 inhabitants, not in the urbanized area contiguous and adjacent to a city or town that has a population of more than 50,000 inhabitants, and excluding certain populations pursuant to 7 U.S.C. 1991(a)(13)(H) and (I). For information on “string exclusions” and “rural in character” determinations, please consult the Agency website. Rural small business. A Small Business that is located in a Rural area. Simple payback means a calculation assessing the financial feasibility of the RES or EEI. See below for how to calculate it based on Project type.

(4)Is divided into four subcategories under this subpart:

(i)Energy replacement systems are those that replace 120 percent or less of the annual energy use prior to installation of the RES, where annual energy use is calculated using the 12 months prior to installation.

(ii)Energy generation systems are those that produce energy in excess of 120 percent of annual energy use prior to installation of the RES, where annual energy use is calculated using the 12 months prior to installation.

(iii)Retrofitting an existing RES.

(iv)Distribution Components and Ancillary Infrastructure as part of an RES. Resource assessment means a report that describes the quality and availability of the renewable resource and the amount of Renewable Energy generated through the deployment of the proposed system. Retrofitting means adding Equipment or processes to or altering or enhancing an existing Renewable Energy System to improve production, efficiency, or financial viability or for the replacement of existing components with components that improve the original design. Activities that are considered operations and maintenance of existing assets to ensure they function properly and safely are not Retrofitting. Examples of Retrofitting include, but are not limited to:

(5)Has service that is readily available to properly maintain and operate the system.

(6)Has an existing established warranty that is valid in the United States for major parts and labor. Cost sharing has the meaning located at 2 CFR 200.1. Cropland has the meaning located at 7 CFR 718.2. Distribution components mean the physical and operational infrastructure necessary to convey the following:

4280.105[Reserved]#

4280.106Conflict of interest.#

No conflict of interest will be allowed.

(a)Description. A conflict of interest (COI) occurs when an individual or entity has a competing personal, professional, or financial interest that may make it difficult for the individual or entity to act impartially

(b)Recipient conflicts of interest. Recipients must comply with 2 CFR 400.2, regarding written disclosure, employee and organizational conflicts of interest, and internal controls.

(c)Assistance to employees, relatives, and associates. The Agency will process any requests for financial assistance under this subpart in accordance with 7 CFR part 1900, subpart D.

(d)Member/delegate clause. No member of or delegate to Congress shall receive any share or part of the financial assistance awarded through this subpart or any benefit that may arise therefrom; provided, however, that this provision shall not be construed to bar, as a contractor under the Federal Award, a publicly held corporation whose ownership might include a member of Congress.

4280.107[Reserved]#

4280.108Compliance with other laws and regulations.#

Applicants and Recipients must comply with all applicable laws and regulations.

4280.109-4280.119-4280.119 [Reserved]#

4280.120Applicant eligibility.#

Applicants must meet the following requirements to be eligible for financial assistance through this program.

(a)Eligible entities. Entities are eligible for assistance through this program if all the following requirements are met:

(1)System for Award Management (SAM) registration and Unique Entity Identifier (UEI). Applicants and Recipients must be registered in SAM. This registration must remain current, accurate, and complete at the time of application, while the application is under consideration for funding, and while a Recipient has an active Federal Award. This registration includes obtaining a UEI, or its successor, and completing the process for “All Awards” through SAM.gov. When registering in SAM.gov, all Applicants must select the All Awards option.

(2)Small Business Administration (SBA) profile. An Applicant applying as a Rural Small Business must establish and maintain an active SBA profile within SAM.gov and be identified as a Small Business through the Small Business Search feature, or its successor.

(3)Legal authority. Each Applicant must have the legal authority necessary to apply for and carry out the purpose of the Federal Award.

(4)Entity type. The Applicant must be organized or incorporated under State. Tribal, or Federal law and must meet the definition of an Agricultural Producer or Rural Small Business at the time of application.

(5)Existing Business. The Applicant must be an Existing Business at least 12 months prior to the start of the Project Period.

(6)Ownership and control. The Applicant must be the Highest-Level Owner or wholly owned by an Indian Tribe. All Applicants must own the RES or EEI that is the subject of the Project and own or control the site for the Project. This ownership must be in place at least 12 months prior to the Project Period for the Project through the time of application and continue until the final payment is disbursed for the Project.

(7)Financial capability. The Applicant is financially sustainable and can maintain the Project into the future.

(i)Current ratio. The balance sheet from the Applicant's most recent fiscal year must show a current ratio of at least 1:1, which means that its current liabilities do not exceed its current assets.

(ii)Cash flow. The cash flow statement for the Applicant's most recent fiscal year must show a positive cash flow.

(iii)Revenue. The Applicant must have available at the time of application satisfactory sources of revenue in an amount sufficient to provide for the operation, management, maintenance, and any debt service of the Project for the Useful Life of the Project. In addition, the Applicant must control the revenues and expenses of the Project, including revenues and expenses related to operation and maintenance.

(8)Number of awards. No more than one award from each Highest-Level Owner and entities owned by its individual owners or each corporation/business wholly owned by an Indian Tribe will be approved each Federal Fiscal Year. Notwithstanding corporations/businesses wholly owned by Indian tribes, the Highest Level Owners individually are eligible for only one award per FFY and may not apply to the program using a different entity owned in whole or in part.

(b)Ineligible entities. Entities are ineligible for assistance from all programs listed in this subpart if any of the following occurs:

(1)Outstanding judgment. An outstanding judgment has been obtained against the entity by the United States in a Federal Court (other than in the United States Tax Court). The entity is ineligible for assistance until the judgment is paid in full or otherwise satisfied. Funds from this program may not be used to satisfy the judgment.

(2)Federal income tax delinquency. The entity is delinquent on the payment of Federal income taxes.

(3)Federal debt delinquency. The entity is delinquent on Federal debt.

(4)Debarment or suspension. The entity is debarred or suspended or is otherwise excluded from or ineligible for participation in Federal assistance programs.

(5)Felony criminal violation. The entity has been convicted of a felony criminal violation under any Federal law within the past 24 months.

(6)Unpaid Federal tax liability. The entity has any unpaid Federal tax liability that has been assessed, for which all judicial and administrative remedies have been exhausted or have lapsed, and that is not being paid in a timely manner pursuant to an agreement with the authority responsible for collecting the tax liability, unless a Federal agency has considered suspension or debarment of the organization and has made a determination that this further action is not necessary to protect the interests of the Government.

(7)Individual. The entity is an individual.

(8)Active Federal Award. The entity has an active award through this program for which the Project Period is not scheduled to end until after September 30 of the year in which the application is submitted.

(9)Foreign ownership. If the entity has foreign investment or ownership, the Agency will evaluate the entity's ability to participate in the Rural Energy for America Program consistent with applicable law. Entities that are headquartered in countries determined to be foreign adversaries as defined by 15 CFR 791.4, are not eligible to participate in the program.

(10)Business operations. Entities that derive income from one or more of the following activities:

(i)Gambling activity. Business operations deriving income from gambling activity. Gambling activities include any lease income from space or machines used for gambling activities. State or authorized lottery proceeds and net revenues generated from gaming by a Tribe pursuant to Tribal law or the Indian Gaming Regulatory Act, 25 U.S.C. 2107 et seq., conducted in part for the purpose of raising funds for the approved Project are excluded.

(ii)Sexual activities. Business operations deriving income from activities of a sexual nature.

(iii)Racing activities. Business operations deriving income from racetracks or facilities for conducting either professional or amateur races of animals, or by professional or amateur drivers or jockeys, or any other type of racing.

(iv)Illegal activities. Business operations deriving income from activities prohibited by local, state, Tribal, or federal law.

4280.121[Reserved]#

4280.122Project eligibility.#

Projects must meet the following requirements to be eligible for financial assistance through this subpart.

(a)Eligible Projects. Eligible Projects must meet all of the following requirements. Failure to meet one or more of these requirements means the application is not eligible for funding.

(1)Project purpose. The Project must be for an RES or an EEI that has been completed between 12 and 24 months prior to the date of application.

(i)RES Projects. All RES Projects must be for one of the following purposes:

(A)The purchase of a new RES;

(B)The purchase of a Refurbished RES; or

(C)The Retrofitting of an existing RES.

(ii)EEI Projects. All EEI Projects must use less energy on an annual basis than the original building or equipment being improved or replaced as demonstrated in an Energy Assessment or Energy Audit, as applicable. Combined heat and power Projects using steam instead of Renewable Biomass must apply as an EEI Project. The purpose of the Project must include one of the following:

(A)Energy Efficiency Improvements. The Project completed EEI to existing buildings or Equipment.

(B)Efficiency improvements. The Project completed EEI to an existing RES.

(C)Replacement of previously funded Project. The EEI Project replaced the same specific EEI Equipment that previously received funds under this subpart at or after the end of the Useful Life, as specified in the FAA, provided the EEI is more energy efficient than the previously funded improvement.

(2)Amount requested. Both RES and EEI Projects have minimum and maximum amounts for the Federal Award that can be requested and approved.

(i)Minimum request. The minimum request for a grant application is $1,500. If an application includes unallowable expenses that when removed, reduce the amount that can be awarded below the minimum amount, the Project is not eligible for funding.

(ii)Maximum request. The maximum request for a RES grant application is $500,000 and the maximum request for an EEI grant application is $250,000.

(3)Cost Sharing. Cost Sharing is required for at least 75 percent of the Project Cost. For example, if the Project Cost is $1,000,000, Cost Sharing must be at least $750,000. Cost Sharing funds must be available for use during the Project Period, and they must be for allowable expenses.

(4)Rural area. The Project must be located in a Rural area, including those areas determined as “string exclusions” or “rural in character.”

(5)Allowable use of funds. All Project Costs, regardless of source, must be used for allowable purposes. See § 4280.125 for additional information.

(6)Project Period. The Project Period begins when the first allowable Project Cost is incurred for the Project. It is based on the development, design, and installation of the RES or EEI and must be no more than 24 months. The Project Period ends no later than 30 days after the RES or EEI is installed and the end date must be between 12 and 24 months prior to the submission of an application. With the exception that for the first application window following the release of the updated regulation the Project Period end date may be between 12 and 36 months prior to submission of the application. For EEI Projects, the Project Period would typically start with the development of the Energy Assessment or Energy Audit. For RES Projects, the Project Period would typically start with the development of the Resource Assessment but could also start with the installation of the RES for smaller-scale systems.

(7)Commercially Available technology. The Project must utilize Commercially Available technology.

(8)Technical sustainability. The Project must demonstrate that it is technically feasible and sustainable based on the information provided in the application. The Agency will assess resource availability, feedstock agreements, off-take agreements, operations and maintenance agreements, third-party certifications for the next year after application. The RES or EEI system must operate and perform over the project's Useful Life in a reliable, safe, and cost-effective manner. EEI Projects must demonstrate this information through an Energy Audit or an Energy Assessment, as appropriate. RES Projects must demonstrate this information through a Resource Assessment or a Feasibility Study, as described in paragraphs (a)(8)(i) and (ii) of this section.

(i)Resource Assessment. A Resource Assessment is a report that describes the quality and availability of the renewable resource and the amount of Renewable Energy generated through the deployment of the proposed system. All of the following must be described in the report for each source of Renewable Energy:

(A)Source of energy. The report must identify the source of Renewable Energy to be used for the Project.

(B)Type of technology. The report must identify the type of technology that will be used for the RES Project: Biomass, Bioenergy, Geothermal Direct Generation, Geothermal Electric Generation, Hydrogen, Hydroelectric, Ocean Energy, Solar, or Wind Energy. The Applicant must also identify whether there are storage components in the system.

(C)Energy output. The report must identify the type of energy output that the system produces (for example, liquid transportation fuel-ethanol, biodiesel, renewable diesel, Biogas, renewable natural gas, Biogas to electricity, wood pellets, wood briquettes).

(D)Byproducts. The report must indicate whether or not the system produces Byproducts. If it does, the Applicant must identify the Byproduct(s) and the amount produced during the 12 months immediately following installation of the RES.

(E)Storage system. The report must identify whether or not a storage system is included in the Project, and if it is, what type (e.g., BESS). The Applicant must clearly state the use cases for the battery (e.g., peak shaving, load shifting, resilience) and how this use benefits the Applicant and/or off taker. The Applicant must provide the dispatch curves for the storage system for the 12 months immediately following installation. Curves must support use case of the RES with energy storage.

(F)Use of energy. The report must identify how the energy is used in the Project.

(1)Interconnection. Indicate whether the RES is interconnected.

(2)End User. Indicate who the End User is. Does the Project include Distribution Components and/or Ancillary Infrastructure? Is the energy produced dispensed at retail?

(3)Metering Agreement. Indicate if there is a Metering Agreement, and what type (e.g. conventional net metering, net billing, aggregate net metering, virtual net metering).

(G)Sale of energy. The report must provide the following information about how the energy produced or saved was used.

(1)Percentage. Indicate the percentage of energy that was sold.

(2)Quantity. Indicate the quantity of energy that was sold for energy output and/or Byproducts and whether there are credits that are applicable, such as LCFS/RIN. If yes, what is the amount?

(3)Price. Indicate the price per unit of energy output and/or Byproducts that was paid. Are there LCRS/RIN credits that are applicable? If yes, what is the amount?

(4)Buyer. Indicate the name of the entity buying the energy.

(5)Type of agreement. Indicate the type of agreement for the sale of energy (e.g. Power Purchase Agreement, energy sales agreement, energy service agreement, off-take agreement, and/or delivery agreement)? The report must provide the following information:

(i)Purchasing energy output. Indicate whether there is an agreement for purchasing energy output. If yes, what is the name of the counter party (i.e. purchaser)?

(ii)Byproducts. Indicate if there Byproducts. If yes, is there an agreement to purchase the Byproduct? If yes, what is the name of the counter party (i.e. purchaser)?

(H)Additional information. The Resource Assessment must include the additional information described below based on energy source and technology.

(1)Wind. The Resource Assessment must provide the following information for Wind Energy Projects:

(i)Source. Indicate the source of the wind data.

(ii)Conditions and assumptions. Describe the conditions of the wind monitoring when collected at the site or the assumptions made when applying nearby wind data to the site.

(2)Solar. The Resource Assessment must provide the following information for Solar Projects:

(i)Source. Indicate the source of the solar data.

(ii)Type of system. Indicate whether the system is Solar Electric or Solar Thermal.

(iii)Assumptions. Describe the assumptions made.

(3)Bioenergy/Biomass Project. The Resource Assessment must provide the following information for Bioenergy and Biomass Projects:

(i)Renewable Biomass resource. Indicate the type, quantity, quality, and seasonality of the Renewable Biomass resource, including harvest and storage, where applicable.

(ii)Shipping and receiving. Where applicable, indicate shipping or receiving method and required infrastructure for shipping.

(iii)Process method. Indicate the process method: dry-mill, wet-mill, screw-press, chemical, or other.

(iv)Woody biomass. Document that any and all woody biomass feedstock from National Forest System land or public lands was not be used as a higher value wood-based product.

(v)Feedstock. Provide the following information for the feedstock for the RES: the substrates used as digester inputs, including animal wastes or other Renewable Biomass in terms of type, quantity, seasonality, and frequency of collection; any special handling of feedstock that may be necessary; the process for determining the feedstock resource; the annual feedstock requirement of the system in pounds, tons, metric tons, cords of wood, or other; any seasonality considerations for the feedstock; the annual amount of feedstock required by the system will be secured; the term of the feedstock agreement; the renewal options for the feedstock agreement; and who controls the option to renew the feedstock agreement.

(4)Geothermal Electric Generation. The Resource Assessment must provide the following information for Geothermal Electric Generation Systems:

(i)Ground-source. Indicate whether the system is a ground-source heat pump.

(ii)Quality of the resource. Indicate the quality of the geothermal resource, including temperature, flow, and sustainability and what conversion system is to be installed.

(iii)Special handling. Describe any special handling of cooled geothermal waters that may be necessary.

(iv)Resource determination. Describe the process for determining the geothermal resource, including measurement setup for the collection of the geothermal resource data.

(5)Geothermal Direct Generation. The Resource Assessment must provide the following information for Geothermal Direct Generation Systems:

(i)Quality of resource. Indicate the quality of the geothermal resource, including temperature, flow, and sustainability and what direct use system is to be installed.

(ii)Special handling. Describe any special handling of cooled geothermal waters that may be necessary.

(iii)Resource determination. Describe the process for determining the geothermal resource, including measurement setup for the collection of the geothermal resource data.

(6)Biogas. The Resource Assessment must include the following information for Biogas Projects:

(i)Capture and treatment. Identify the method of gas capture and treatment: landfill, food waste, sewage waste treatment, or other.

(ii)Feedstock information. Provide the following information for the feedstock for the RES: the substrates used as digester inputs, including animal wastes or other Renewable Biomass in terms of type, quantity, seasonality, and frequency of collection; any special handling of feedstock that may be necessary; the process for determining the feedstock resource; the annual feedstock requirement of the system in pounds, tons, metric tons, cords of wood, or other; any seasonality considerations for the feedstock; how the annual amount of feedstock required by the system will be secured; the term of the feedstock agreement; the renewal options for the feedstock agreement; and who controls the option to renew the feedstock agreement.

(7)Anaerobic Digester. The Resource Assessment must include the following information for Anaerobic Digester Projects:

(i)Type of system. Indicate whether the system is one of following: complete mix, plug-flow, attached film, covered lagoon, or other.

(iii)Gas production estimates. Provide either tabular values or laboratory analysis of representative samples that include biodegradability studies to produce gas production estimates for the project on daily, monthly, and seasonal basis.

(iv)Type of operation. Identify the type of operation (e.g., dairy, swine, layer, etc.), along with breed, herd population size and demographics.

(v)Waste collection. Identify the method and the frequency of waste collection.

(vi)System developer. Identify the system developer.

(vii)Digester design assumptions. Describe the digester design assumptions such as the number and type of animals, the bedding type and estimated annual quantity used, the manure and wastewater volumes.

(viii)Treatment of digester effluent. Describe the treatment of digester effluent (e.g., none, solids separation by screening, etc. with details including use or method of disposal).

(8)Hydrogen Project. The Resource Assessment must include the following information for Hydrogen Systems.

(i)Resource information. Indicate the type, quantity, quality, and seasonality of the Renewable Biomass resource.

(ii)Renewable resource. For solar, wind, or Geothermal Sources of energy used to generate hydrogen, indicate the renewable resource where the Hydrogen System was installed. Local resource maps may be used as an acceptable preliminary source of renewable resource data.

(9)Hydroelectric/Ocean Energy Projects. The Resource Assessment must include the following information for Hydroelectric System and Ocean Energy Projects.

(i)Quality of the resource. Indicate the quality of the resource, including temperature (if applicable), flow, and sustainability of the resource.

(ii)Resource evaluation. Describe the resource evaluation process, including the date and duration of the evaluation process.

(iii)Measurement setup. Describe the specifications of the measurement setup.

(iv)Proximity. Describe the proximity of the resource to the proposed site.

(10)Storage components. For Projects that include storage components, the Resource Assessment must provide the following information related to the type of technology, as described in paragraphs (a)(8)(i)(A)(1) through (9) of this section.

(i)Storage system specifications. Describe the storage system specifications.

(ii)Integration of the system. Describe how the storage system is integrated with the RES, including application, size, lifetime, response time, capital and maintenance costs associated with the operation.

(iii)Distribution of the stored resource(s). Describe the distribution of the stored resource(s).

(ii)Feasibility Study. A Feasibility Study is a report, conducted by an independent professional possessing relevant knowledge, expertise, and experience, that includes an opinion or finding evaluating the economic, market, technical, financial, and management feasibility of a proposed Project or operation located at a specific site in terms of its expectation for success. It must include the following content:

(A)Economic analysis. The economic analysis is a cost-benefit analysis. It includes all of the following information:

(1)Minimum amount of inputs (e.g. labor, infrastructure, utilities, renewable resources, and feedstocks) to operate successfully;

(2)Contracts in place and contracts to be negotiated, including terms and renewals;

(3)Environmental risks;

(4)Cost of Project relative to the increase in revenues or benefits provided; and

(5)Overall economic impact of Project, including new markets created and economic development.

(B)Market analysis. The market analysis is an analysis of the current and future market potential, competition, sales or service estimations, including current and prospective buyers and End Users. The market analysis includes all of the following information:

(1)Competition;

(2)Type of Project: service, product, or commodity based;

(3)Target market, including new versus established;

(4)End User analysis, including captive versus competitive;

(5)By-product revenue streams; and

(6)Industry risk.

(C)Technical analysis. The technical analysis is an analysis of the reliability of the technology to be used and/or the analysis of the delivery of goods or services, including transportation, business location, and the need for technology, materials, and labor. It includes all of the following information:

(1)Commercial availability;

(2)Product and process success record and duplication of results;

(3)Experience of the service providers;

(4)Infrastructure, including roads, rail, and airports;

(5)Need for local transportation;

(6)Labor market;

(7)Availability of materials;

(8)Use, age, and reliability of technology; and

(9)Construction risk.

(D)Financial analysis. The financial analysis is an analysis of the operation to achieve sufficient income, credit, and cashflow to financially sustain the Project over the long term and meet all debt obligations. It includes all of the following information:

(1)Commercial or Project underwriting;

(2)Management's assumptions;

(3)Accounting policies;

(4)Source of repayment;

(5)Dependency on other entities;

(6)Equity contribution;

(7)Market demand forecast;

(8)Peer industry comparison;

(9)Cost-accounting system;

(10)Availability of short-term credit;

(11)Adequacy of raw materials and supplies; and

(12)Sensitivity analysis.

(E)Management analysis. The management analysis is an analysis of the legal structure of the business or operation and the ownership, governance, and management. It includes all of the following information:

(1)History of the business or organization;

(2)Professional and educational background;

(3)Experience;

(4)Skills; and

(5)Qualifications necessary to implement the Project.

(F)Recommendation. The recommendation of the independent professional(s) conducting the Feasibility Study must be included.

(G)Qualifications. The qualifications of the consultant(s) conducting the Feasibility Study must be included.

(9)Qualified Key Service Providers. All Key Service Providers must be qualified. In particular, the entity installing the RES or EEI must be licensed in the State where installation will occur and have previously installed at least three RES or EEI similar to what is proposed in the application. Individuals or entities who have a conflict of interest are not considered qualified Key Service Providers. (See § 4280.106 for more information on conflict of interest.)

(10)Key Service Provider selection. All Key Service Providers must be selected using procurement procedures that comply with 2 CFR 200.318 through 200.327.

(11)Completion certificate. The Applicant must certify that the design, engineering, testing, and monitoring is sufficient for the Project's intended purpose. For larger-scale Projects, more complex Projects, or with a Project Cost of $200,000 or more, the Agency requires a completion certificate completed by a professional engineer licensed in the State where the Project was completed as a condition of an award.

(12)Environmental requirements. Environmental review documentation must comply with the requirements in 7 CFR part 1b.

(13)Architectural barriers. All facilities intended for or accessible to the public or in which physically handicapped individuals may be employed must comply with the Architectural Barriers Act of 1968 (42 U.S.C. 4151 et seq.) as implemented by 41 CFR 101-196, section 504 of the Rehabilitation Act of 1973 (42 U.S.C. 1474 et seq.) as implemented by 7 CFR parts 15 and 15b, and Titles II and III of the Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et seq.).

(14)Seismic safety. All new structures, fully or partially enclosed, used or intended for sheltering individuals or property will be designed with appropriate seismic safety provisions in compliance with applicable local, state, Tribal, and federal law, such as the Earthquake Hazards Reduction Act of 1977 (42 U.S.C. 7701 et seq.) and Executive Order 13717, “Establishing a Federal Earthquake Risk Management Standard.”

(15)Bioenergy. For Bioenergy Projects, woody biomass feedstock from National Forest System land or public lands cannot be used as a higher value wood-based product.

(16)Dedicated metering. The Project must have a dedicated meter(s). For example, if an Applicant has one meter that covers its Rural Small Business and its residence, the Applicant must install a separate meter that is dedicated to the Rural Small Business to allow the energy generated to be measured.

(17)Residential use exceptions. Only the following uses of energy related to residential use are eligible for the program.

(i)Providing energy through a community solar subscription program where the End Users do not own the assets;

(ii)Providing energy for nursing homes and assisted living facilities that provide full-time 24 hours a day, seven days a week, licensed medical care for residents; and

(iii)Providing energy for for-profit hotels that provide short-term housing (30 days or less).

(18)Simple Payback Period. The Simple Payback Period must be equal to or less than the Agency approved Useful Life of the RES or EEI.

(19)Energy Storage Systems including BESS. For RES Projects with an associated energy storage system, the total Annual Energy Production of the RES is limited to a capacity of 120 percent of the annual energy consumption of the Applicant for the 12 months prior to project installation or the maximum production allowable by the interconnected utility, which shall not exceed 120 percent of annual energy consumption. The size of the energy storage system must not exceed 100 percent of the size of the RES with which it is paired.

(20)Permits and codes. The completed Project comply with all applicable local, State, Tribal, and Federal codes and all required permits must be obtained.

(b)Ineligible projects. Projects that include one or more of the following are ineligible for assistance under this subpart:

(1)Amount requested. The application requests less than the minimum or more than the maximum award amount.

(2)Research and development. The Project includes research and development, as defined in 2 CFR 200.1, or trials, demonstration units, and pilot projects.

(3)Technology. The Project involves technology (including the system, improvements, process, and components) that is not Commercially Available.

(4)Residential. The Project includes residential RES or EEI, including, but not limited to, primary residences, such as apartments, single-family homes, and residences attached to businesses, in-home businesses, farm labor housing, apartment complexes, bed and breakfasts, and vacation rentals by owner (e.g. VRBOs, Airbnbs), regardless of whether the owner lives on-site or not.

(5)Use of energy. The energy is used for residential purposes, except for the following uses:

(i)Providing energy through a community solar subscription program where the End Users do not own the assets;

(ii)Providing energy for nursing homes and assisted living facilities that provide full-time 24 hours a day, seven days a week, licensed medical care for residents; and

(iii)Providing energy for for-profit hotels that provide short-term housing (30 days or less).

(6)Co-firing with non-Renewable Energy sources. RES Projects that use dual fuel sources where at least one source is not renewable. Non-Renewable Energy sources include, but are not limited to the following: fossil fuels, natural gas, petroleum-based products, materials such as coal, and other non-renewable fuels, oils, and chemicals, tires and plastic.

(7)RES Retrofitting Projects. The Project retrofits an existing ground mount solar or wind RES or any solar or wind RES on Cropland.

(8)EEI replacement Projects. The Project replaces the same specific EEI Equipment that had previously received funds under this subpart prior to the end of the Useful Life, as specified in the FAA, even if it is more energy efficient than the previously funded improvement.

(9)Multiple technologies. The Project utilizes two or more different types of RES technologies that are not incorporated into a Hybrid System.

(10)Multiple locations. The Project installs an RES or an EEI at more than one location.

(11)Cropland installation. The Project involves a ground mount solar photovoltaic system or wind turbine installed on Cropland.

(12)Rated System Size. The Project involves the installation or retrofit of a Hydroelectric System Project with a Rated System Size of greater than 30 MW.

(13)Historical Energy Usage Documentation. The Project involves ground mount solar photovoltaic or ground mount wind systems that cannot document commensurate historical energy usage.

(14)Mobile system. The Project involves an RES not directly mounted on a vehicle that is used to carry out the Applicant's full-time business operations, or the Project involves EEI to any vehicle.

(15)Dispensing energy at retail. The Project includes a mechanism for dispensing energy at retail are not eligible.

(16)Labor only Projects. The Project includes only labor costs and no Equipment and materials costs for the RES or EEI.

(17)Distribution only Projects. The Project includes only moving Renewable Energy from one point to another.

(18)Storage systems. The Project involves the following activities related to storage systems:

(i)Retrofitting an existing RES to add an energy storage system. Includes Battery Energy Storage Systems as well as other energy storage systems.

(ii)Stand-alone energy storage systems. Includes Battery Energy Storage Systems as well as other energy storage systems.

(19)Foreign components. The Project includes a solar photovoltaic system or wind turbine consisting of any component made in a country named as a foreign adversary as listed in 15 CFR 791.4, with the exception that Projects that were installed prior to the publication date of this regulation are exempt. All other completeness and eligibility requirements identified in this subpart must be met.

(20)REAP funding limitation. The Project includes a REAP funding request where the total amount of REAP funding (grant and guaranteed loan) would represent more than 75% of the Project Cost.

(21)Unallowable costs. The Project budget includes more than 25 percent of costs as unallowable costs. Projects that include 25 percent or less of unallowable costs will have the unallowable costs removed prior to considering other eligibility factors. Unallowable costs are identified in § 4280.125(b).

(22)Conflict of interest. The Project includes any conflict of interest. See § 4280.106 for more information on conflict of interest.

4280.123Reserved funds eligibility.#

Applications requesting $20,000 or less in award funds are eligible to compete for reserved funds.

4280.124[Reserved]#

4280.125Use of funds.#

Allowable and unallowable uses of funds are described as follows:

(a)Allowable uses of funds. The following types of activities and expenses are allowable, provided that they are directly related to the approved RES or EEI Project, incurred as part of the installation of the RES or EEI, and integral to the operation of the RES or EEI. Additional information on allowability of costs can be found at 2 CFR part 200, subpart E, for all entity types.

(1)Purchase and installation of new or Refurbished Equipment related to the installation and/or operation of the RES or EEI, provided that the Project budget includes both Equipment and installation of the system or improvements as a whole;

(2)Construction related to the installation of the RES or EEI, Retrofitting, replacement, and improvements;

(3)Energy Assessment or Energy Audit, unless the cost was charged in whole or in part to another Federal Award;

(4)Resource Assessment, unless the cost was charged in whole or in part to another Federal Award;

(5)Fees for construction permits and licenses and fees required by an Interconnection Agreement;

(6)Architectural fees;

(7)Engineering fees;

(8)Installation of a dedicated meter for an RES Project;

(9)Up to 25 percent of Project Costs for Distribution Components and Ancillary Infrastructure for RES Projects that include Distribution Components and Ancillary Infrastructure; and

(10)Up to 10 percent of the award amount to construct, improve, or acquire broadband infrastructure related to the project financed, subject to the requirements of 7 CFR part 1980, subpart M;

(b)Unallowable uses of funds. Activities and expenses related to any of the following are unallowable:

(1)Real Property;

(2)Agricultural, lawn, and garden Equipment and power tools, including, but not limited to: tractors, bailers, lawn mowers, weed whipper/eaters, cultivators, skid steers, bulldozers, chain saws, and wood splitters;

(3)Used Equipment;

(4)Equipment not wholly owned by the Recipient, for example, utility-owned substation upgrades, overhead lines, and poles;

(5)Vehicles, including motorized, unmotorized, and electric vehicles, and modifications that are used to improve a vehicle's ability to propel itself (e.g., modifying an existing vehicle's engine to run on renewable fuels or replacing an older vehicle with a new, more efficient vehicle);

(6)Lease payments, including lease to own or capitalized leases;

(7)Feasibility studies;

(8)Monthly meter fees;

(9)Insurance;

(10)Operations and maintenance;

(11)Extended warranties;

(12)Perimeter fencing;

(13)Costs for labor completed by any individual who owns the Applicant entity;

(14)Goods or services from an individual or entity who has a conflict of interest with the Recipient (see § 4280.106);

(15)Funds used for political or lobbying activities;

(16)Funds used to repay any Federal direct or guaranteed loans or other Federal debt or judgment;

(17)Costs for the preparation of the grant application;

(18)Expenses not directly related to the funded Project, including construction or Equipment (e.g., the foundation for a building where an RES is installed, storage-only grain bins connected to drying systems, or the roof of a building where solar panels are attached);

(19)Expenses paid for by another Federal Award;

(20)Activities that are considered unallowable by the applicable cost principles, most of which are included in 2 CFR part 200, subpart E; and

(21)Costs incurred outside the Project Period.

4280.126-4280.130-4280.130 [Reserved]#

4280.131Application requirements.#

This section identifies the items required for a complete application. All applications must include the following items, with the exception of the information in paragraph (a)(14) of this section, which is optional.

(a)Applicant eligibility. The following requirements support Applicant eligibility.

(1)Applicant's legal name. The Applicant must provide its legal name. This name must match what is entered in SAM.gov and what is on the Certificate of Good Standing.

(2)Applicant's address. The Applicant must provide its primary address. This address must match what is entered in SAM.gov.

(3)Identification numbers. The Applicant must provide its Unique Entity Identifier from its SAM.gov registration and Social Security number (SSN) or Taxpayer Identification Number (TIN) in order for the Agency to assess eligibility.

(4)Incorporation date. The Applicant must provide the date it was incorporated.

(5)Certificate of Good Standing. The Applicant must provide a current Certificate of Good Standing from the State in which the Applicant is incorporated or registered, or from the Bureau of Indian Affairs or Tribe, as applicable

(6)Entity bylaws. The Applicant must provide its bylaws or operating agreements that show its legal authority to apply for and carry out the Project.

(7)Principals. The Applicant must provide the names and SSN or TIN of the Principals for this Federal Award. The identification numbers will be used to assess eligibility for the Federal Award.

(8)Applicant entity type. The Applicant must indicate whether it is applying as an Agricultural Producer or a Rural Small Business.

(i)Agricultural Producer. If the Applicant is applying as an Agricultural Producer, it must provide all of the following information:

(A)Owner names. The Applicant must provide the exact legal name(s) of all owners in the organization.

(B)Percentage of ownership. The Applicant must provide the percentage of ownership for each owner.

(C)Participation in operations. The Applicant must indicate whether the owners participate in the day-to-day labor, management, and/or field operations of the Applicant.

(D)Agricultural Commodity. The Applicant must identify the primary Agricultural Commodity produced or that the Applicant has the legal right to harvest.

(E)Annual income. The Applicant must indicate the total annual income of the majority-owner and the amount of annual income derived by that majority-owner from the Applicant's operations from the most recent tax year.

(ii)Rural Small Business. If the Applicant is applying as a Rural Small Business, it must indicate whether the Applicant has been designated by the Small Business Administration as a Small Business in SAM.gov. Additionally, it must provide all of the following information:

(A)Owner names. The Applicant must provide the exact legal name(s) of all owners in the organization.

(B)Percentage of ownership. The Applicant must provide the percentage of ownership for each owner.

(9)Financial statements. Applicants must provide financial statements as described below.

(i)All applications. The Applicant must provide the following business-level financial statements: an income statement, balance sheet, and statement of cash flows, including all revenue streams from the Project, debt-service of the Project, annual operations and maintenance, investments, and incentives from the Applicant's most recent completed fiscal year prior to the date of application. Project-level financial statements will not be accepted.

(ii)Project Cost $200,000 and greater. In addition to the financial statements required in the paragraph above, the Applicants with Projects that have Project Cost of $200,000 or greater must provide two years of pro forma financial statements for the Project, including income statements, balance sheets, statements of cash flows, and assumptions.

(10)Summary of REAP awards. The Applicant must describe any current or previous awards received through the REAP program, including both grants and guaranteed loans. The description must include the Project Period, the amount, and a summary of the Project.

(11)Business operations. The Applicant must describe its business, including the time period that it has been in operation and earning revenue, the type of products or services provided, the number of employees, who the customers are, and the sources of revenue from its business operations, including if the operations include gambling, sexual activities, professional or amateur racing of animals, or illegal activities. Note that each employee is counted as one, regardless of their status as full-time, part-time, temporary, or seasonal. To calculate the number for the application, use the average number of employees over the most recent 12 consecutive months.

(12)Foreign ownership. The Applicant must identify any foreign ownership, including the name(s) of the foreign owners and the percentage of ownership.

(13)Conflict of interest. The Applicant must identify whether or not the Applicant or its individual owners has a known relationship or association with an Agency or Rural Development employee. If there is a known relationship, the Applicant must identify each Agency or Rural Development employee with whom the Applicant has a known relationship. The Applicant must also certify that there is no conflict of interest, as defined in § 4280.106.

(b)Project eligibility. The following requirements support Project eligibility.

(1)Project description. The Applicant must provide a brief description of the Project.

(2)Type of Project. The Applicant must indicate whether the Project is an RES or an EEI Project and the purpose under § 4280.122(a)(1). If the Project is an RES, the Applicant must indicate whether it is considered to be an energy replacement or energy generation Project (see the definition of Renewable Energy System in this subpart for more information).

(3)Technical sustainability. For EEI Projects, the Applicant must provide an Energy Assessment if the Project Cost is $80,000 or less; otherwise it must provide an Energy Audit. For RES Projects, the Applicant must provide a Resource Assessment, or the Applicant can provide a Feasibility Study in lieu of a Resource Assessment. In addition, the Applicant must provide the information from the Energy Assessment, Energy Audit, Resource Assessment, or Feasibility Study, as applicable, to allow the Agency to assess the technical sustainability of the Project.

(4)Agreements. For Projects with a Project Cost of more than $80,000, the Applicant must submit copies of all agreements related to the Project, including, but not limited to, Power Purchase Agreements, Interconnection Agreements, lease agreements, feedstock agreements, off-take agreements, End User agreements, financing agreements, and operations and maintenance agreements.

(5)Country of origin. For solar and Wind Energy Projects, the Applicant must identify the country of origin for all system components.

(6)Commercially Available technology. The Applicant must describe how the Project meets the definition of Commercially Available technology, as provided below.

(i)Operating history. The Applicant must describe the operating history of the RES or EEI to demonstrate that the RES or EEI is proven and reliable. The operating history must include names or examples of other RES or EEI installed using the same type of RES or EEI technology used in the Applicant's Project, including feedstock(s) and integrated processes, rather than the specific operating history for the Applicant's RES or EEI.

(ii)Performance data. The Applicant must provide performance data for at least one year that is specific to the operation and use of the RES or EEI. This data must be from a system other than the Applicant's.

(iii)Feedstock. If applicable, the Applicant must identify the specific feedstock used.

(iv)Process to produce or save energy. The Applicant must describe the specific process used to produce or save energy.

(v)Design and installation procedures. The Applicant must describe how the RES or EEI is based on established design and installation procedures.

(vi)Replicability. The Applicant must describe how the RES or EEI is replicable.

(vii)Service providers. The Applicant must describe how the RES or EEI has professional service providers, trades, large construction Equipment providers, and laborers who are familiar with installation procedures and practices.

(viii)Equipment availability. The Applicant must describe how the RES or EEI has proprietary and balance of system Equipment and spare parts that are readily available.

(ix)Service availability. The Applicant must describe how the RES or EEI has service that is readily available to properly maintain and operate the system.

(x)Warranty. The Applicant must describe the warranty for major parts and labor for the RES or EEI that is valid in the United States.

(7)Key Service Providers. The Applicant must provide the following information for all Key Service Providers.

(i)Name;

(ii)Type of service provided (for example, installation);

(iii)License type and number for the State in which the installation occurred;

(iv)Description of qualifications, including how many similar systems have been installed;

(v)Description of how the Key Service Provider was selected (for example, how many bids were received and how was the decision made to select the Key Service Provider); and

(vi)A certification that there is no conflict of interest between the Key Service Provider and the Applicant and between the Key Service Provider and any other Key Service Provider working on the Project.

(8)Procurement contracts. The Applicant must provide a description for each procurement contract utilized for the Project. The description must include—

(i)The name of contractor;

(ii)The amount of contract;

(iii)A description of work performed under the contract; and

(iv)A description of how the contractor was selected.

(9)Dedicated meter. The Applicant must certify that the Project uses a dedicated meter.

(10)Completion certificate. The Applicant must certify that the design, engineering, testing, and monitoring is sufficient for the Project's intended purpose. For Projects with a Project Cost of $200,000 or more, the Agency requires a completion certificate completed by a professional engineer licensed in the State where the Project was completed.

(11)Project location. The Applicant must provide the address for the Project location.

(12)Cropland usage. The Applicant must indicate if Cropland was used for the Project, and if so, how many acres.

(13)Size of RES. The Applicant must provide the Rated System Size and Annual Energy Production of the RES.

(14)Project Period. The Applicant must provide the dates when costs were incurred for the Project, i.e. the Project Period. As a reminder, the Project Period must end between 12 and 24 months prior to the date of application. With the exception that for the first application window following the release of the updated regulation the Project Period end date may be between 12 and 36 months prior to submission of the application. For example, if the application is submitted on August 31, 2027, then the Project Period must end no later than August 31, 2026. With an ending date of August 31, 2026, the Project Period must start no earlier than September 1, 2024.

(15)Budget. The Applicant must provide an itemized budget that includes all Cost Sharing provided, Program Income, Project Cost, and itemized Project expenses. The budget must include a listing of each cost, with a description, expense category, amount, date incurred, date paid, and whether the expense was paid with Cost Sharing or Federal funds.

(16)Cost Sharing verification. The Applicant must provide verification of Cost Sharing if the Cost Share was provided by a third party. The Applicant must submit a commitment letter signed by an authorized official of the third party. The letter must be specific to the project, identify the dollar amount, and identify any applicable rates and terms.

(17)Simple Payback. The Applicant must provide the information for the Simple Payback calculation, including the following data:

(i)Energy amount. For RES projects, the Applicant must provide the historical energy use in terms of quantity and unit of measurement for the 12 consecutive months pre-installation and 12 months of energy produced post-installation of the RES. For EEI projects, the Applicant must submit the pre-installation energy consumption of the existing building or system and the post-installation energy consumption of the improved building or system as documented in the Energy Assessment or Energy Audit.

(ii)Energy value. For RES Projects, the Applicant must submit the dollar value of the energy produced on a per unit basis for the 12 months pre-installation and for the 12 months post-installation. For the average dollar value, the following charges should be excluded: fixed meter charge, demand charges, subsidy charges, and sales tax. For EEI Projects, the Applicant must submit the dollar value of the energy saved based on the Energy Audit, as updated 12 months post-installation. For both RES and EEI Project Off-Grid Systems (regardless of historical energy source), the Applicant must provide a written statement from the utility company that services the Project location that identifies the average price per kW hour for the 12 month period prior to installation.

(18)Ownership of the RES or EEI. The Applicant must confirm that it owns the RES or EEI that is the subject of the application at the time of application. The Applicant must confirm that it intends to maintain the ownership of the RES or EEI until the final disbursement for the Federal Award is made. Note that the Applicant will be required to provide copies of all invoices and payments if an award is made, and these documents must all demonstrate that the Applicant owns the RES or EEI.

(19)Ownership of the Project site. The Applicant must confirm that it owns or controls (through a lease or in the case of tribal trust land through beneficial interest)) the site where the RES or EEI is installed for at least 12 months prior to the Project Period for the Project through the time of application. The Applicant must also confirm that it intends to maintain the ownership or control until the final disbursement for the Federal Award is made. If the site is owned by the Applicant, the Applicant must provide a copy of the deed or tax assessment for the Project site. If the site is controlled through a lease agreement or tribal trust land through beneficial interest, a copy of the executed lease or deed must be provided at the time of application. In particular, the lease agreement must include the following information:

(i)Parties to the lease, where one party is the Applicant;

(ii)Start and end dates of the lease term; and

(iii)Legal description of the Project location that matches the site footprint of the RES or EEI.

(20)Architectural barriers. The Applicant must certify that all facilities intended for or accessible to the public or in which physically handicapped individuals may be employed are in compliance with the Architectural Barriers Act of 1968 (42 U.S.C. 4151 et seq.) as implemented by 41 CFR 101-196, section 504 of the Rehabilitation Act of 1973 (42 U.S.C. 1474 et seq.) as implemented by 7 CFR parts 15 and 15b, and Titles II and III of the Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et seq.).

(21)Seismic safety. The Applicant must certify that all new structures, fully or partially enclosed, used or intended for sheltering individuals or property were designed with appropriate seismic safety provisions in compliance with the Earthquake Hazards Reduction Act of 1977 (42 U.S.C. 7701 et seq.), and Executive Order 13717, Establishing a Federal Earthquake Risk Management Standard.

(22)Applicable laws, regulations, agreements, permits, codes, and standards. The Applicant must certify that the Project was completed in accordance with applicable laws, regulations, agreements, permits, codes, and standards.

4280.132[Reserved]#

4280.133Submission requirements.#

The following information identifies when applications can be submitted, where applications must be submitted, and the format of applications.

(a)Submission period. The Agency will publish the dates for the application period on its website.

(1)Applications requesting $20,000 or less. Applicants requesting a grant of $20,000 or less can submit their applications during the published application period to be considered for reserved funding. Applications are due by 5:00 p.m. Eastern time on the published deadline. Applications received after the deadline will not be considered for funding in this competition. Applications not funded as a result of this competition will be considered as part of the “All other applications” competition in paragraph (a)(2) of this section unless the application is withdrawn by the Applicant in accordance with § 4280.141.

(2)All other applications. All other applications must be submitted during the published application period. Applications are due by 5:00 p.m. Eastern time on the published deadline. Applications received after the deadline will not be considered for funding.

(b)Submission process. All items required for the application must be submitted in a single application. No attachments other than the required items will be considered. Incomplete applications will be rejected by the Agency during its completeness evaluation (see § 4280.140 for more information). An annual notification for the program will provide instructions on how and where to submit completed applications for REAP funding.

(c)Number of applications. No more than one application from each Highest-Level Owner and entities owned by its individual owners or each corporation/business wholly owned by an Indian Tribe will be accepted each Federal Fiscal Year. An application for a specific Project can only be submitted one time per FFY.

4280.134-4280.139-4280.139 [Reserved]#

4280.140Application processing.#

The following information describes the way the Agency will process applications. Applications will be evaluated for completeness, eligibility, risk, and merit.

(a)Completeness evaluation. The Agency will review all submitted applications for completeness. Applications must include all information needed to assess eligibility, risk, and merit, including all of the requirements identified in § 4280.131, in order to be further processed for eligibility, risk, and merit evaluations. The Agency will notify Applicants who submitted incomplete applications in accordance with § 4280.152.

(b)Eligibility evaluation. The Agency will review all complete applications to determine if they are eligible for assistance based on the requirements in this subpart and other applicable laws and regulations. As part of this process, the Agency will check the OMB-designated repository of government information, and Applicants that are excluded from Federal funding will be determined ineligible (see 2 CFR 200.206 for more information). Applications that do not meet one or more eligibility requirements will not be further processed for risk and merit evaluations. The Agency will notify Applicants who submitted ineligible applications in accordance with § 4280.152.

(c)Risk evaluation. The Agency will review all eligible applications for risk based on the financial and performance factors described in § 4280.140(c)(1) and (2). Principals for the Applicant and Project will be evaluated for risk based on paragraph (c)(3) of this section.

(1)Financial risk evaluation. The Agency will review the Applicant's most recent independent audit (if available) and financial statements. The Applicant's financial solvency, internal controls, and any audit findings will be assessed. Applicants whose ratio of current assets to current liabilities is not at least 1:1 will be considered to be too high of a risk to fund and will be notified that their application cannot be funded and the Agency will issue a written notification in accordance with § 4280.152. Other types of deficiencies or risks will be assessed on a case-by-case basis. The Agency will consider reasonable options to mitigate identified risks. However, for deficiencies and risks that are significant or cannot be reasonably mitigated, the Agency will determine that the application cannot be funded and will issue a written notification in accordance with § 4280.152.

(2)Performance risk evaluation. The Agency will review any Federal Awards the Applicant, its affiliates, or its individual owners received during the five years prior to the application deadline through SAM (or its successor system), the Do Not Pay system (or its successor system), other Federal or Departmental level award or performance systems adopted by the Agency, and the Agency's internal financial record-keeping systems and files. The Applicant's ability to submit required reports and documents, complete approved tasks on time, meet approved budget requirements, and use Project funds properly will be evaluated. Applicants, their affiliates, and their individual owners with more than a total of two Federal Awards with performance deficiencies will be considered too high of a risk to be funded and will be notified in accordance with § 4280.152. Other types of deficiencies or risks will be assessed on a case-by-case basis. The Agency may consider reasonable options to mitigate identified risks. However, for deficiencies and risks that are significant or cannot be reasonably mitigated, the Agency will determine that the application cannot be funded and will issue a written notification in accordance with § 4280.152.

(3)Principals. The Agency will review any available records in SAM, DNP, other Federal or Departmental systems, and the Agency's systems for financial risks and performance deficiencies on Federal Awards. If the Agency determines that a Principal is an excluded party or poses a significant risk to the performance under the proposed Project, it will determine that the application cannot be funded and will issue a written notification in accordance with § 4280.152.

(d)Merit evaluation. The Agency will conduct a merit evaluation for those applications that are determined eligible for the program, unless a risk evaluation determines that the application cannot be funded (see § 4280.140(c)). The merit evaluation will be conducted by USDA employees, who will score the application based on the criteria below. The total points available are 90. An additional 10 points are possible through the priority points described in paragraph (e) of this section. Note that in cases where points and percentages must be rounded, the standard rounding process will be applied.

(1)Impact (0-10 points). The Agency will award points as described in paragraphs (d)(1)(i) and (ii) of this section.

(i)Number of employees (0 or 5 points). The Agency will award 5 points for Applicants that employ at least three employees, other than the individuals who own the Applicant entity. The Agency will award zero points for Applicants that employ less than three people.

(ii)Critical community impact (0 or 5 points). The Agency will award 5 points for Applicants that are businesses that provide critical community services, such as grocery stores, laundry facilities, veterinary clinics, and medical offices. The Agency will award zero points for Applicants that do not fit into this category.

(2)Quantity of energy to be saved or produced per award dollar requested (0-25 points). The Agency will award points as described in paragraphs (d)(2)(i) and (ii) of this section:

(i)EEI. The Agency will award points based on annual energy saved per award dollar requested. The quantity of energy saved per award dollar requested will be determined by dividing the total annual energy saved (as converted to BTUs) by the award dollars requested. Points will be awarded based on the annual amount of energy saved based on the calculation in this paragraph (d)(2)(i). The points will be rounded to the nearest hundredth and are capped at 25. Equation 1 to Paragraph (d)(2)(i) BTUs of energy saved per award dollar requested ÷ 100 = points

(ii)RES. The Agency will award points based on annual energy produced by the RES Project per award dollar requested. The quantity of energy produced per award dollar requested will be determined by dividing the total annual energy generated (as converted to BTUs) by the award dollars requested. Points will be awarded based on the annual amount of energy produced based on the calculation in this paragraph (d)(2)(ii). The points will be rounded to the nearest hundredth and are capped at 25. Equation 2 to Paragraph (d)(2)(ii) BTUs of energy generated per award dollar requested ÷ 100 = points

(3)Percentage of energy saved or replaced (0-20 points)—(i) EEI. The Agency will award points based on the amount of energy saved by the Project compared to the amount of energy consumed by the Applicant at the Project location over a 12-month period. The calculation will be based on the Applicant's consumption of energy for the 12 months prior to making the improvements and compared to the 12 months after making the improvements. Table 1 to Paragraph (d)(3)(i) Percent of energy saved Points awarded 9.4% or less 0 9.5%-19.4% 5 19.5%-34.4% 10 34.5%-49.4% 15 49.5% and above 20

(e)Priority points (0-10 points). RBCS may select priorities that are applicable to the program. These priorities will be provided on the program website.

(ii)RES. The Agency will award points based on the amount of energy replaced by the Project compared to the amount of energy consumed by the Applicant at the Project location over a 12-month period. The calculation will be based on the Applicant's consumption of energy for the 12 months prior to installing or Retrofitting the RES and compared to the 12 months after installing or Retrofitting the system. Table 2 to Paragraph (d)(3)(ii) Percent of energy replaced Points awarded 9.4% or less 0 9.5%-24.4% 5 24.5%-49.4% 10 49.5%-74.4% 15 74.5%-109.4% 20 109.5% and above 0

(4)Environmental benefits (0-5 points). The Agency will award points based on the environmental benefits directly attributable to the proposed Project as assessed at the Project level based on the description in this paragraph (d)(4).

(i)EEI. The Agency will award points to EEI Projects as described in this paragraph (d)(4)(i).

(A)Greenhouse gases (0 or 3 points). Projects that do not produce greenhouse gases receive 3 points. All other Projects receive 0 points.

(B)Forest conservation (0 or 1 point). Projects that take into consideration fire hazards on forest lands receive 1 point if the consideration is effectively discussed in the application. All other Projects receive 0 points.

(C)Water conservation (0 or 1 point). Projects that use water as part of the EEI that demonstrate a reduced use of water receive 1 point. All other Projects receive 0 points. Examples of Projects that could receive points are converting gravity to subsurface drip irrigation, using less water than industry standard, cleaning up existing surface or ground water, and stewardship practices going above environmental regulation minimums.

(ii)RES. The Agency will award points to RES Projects as described in this paragraph (d)(4)(ii):

(A)Greenhouse gases (0 or 3 points). Projects that do not produce greenhouse gases receive 3 points. All other Projects receive 0 points.

(C)Renewable fuel standard (0 or 1 point). Projects that comply with EPA's renewable fuel standards receive 1 point. All other Projects receive 0 points.

(5)Prior awards (0-15 points). The Agency will award points to both EEI and RES Projects based on whether the Applicant has been approved for a Federal Award under this subpart.

(i)Prior award within two years (0 points). The Applicant has been approved for a Federal Award under this subpart within the two previous Federal Fiscal Years.

(ii)No prior awards within two years (5 points). The Applicant has not been approved for a Federal Award under this subpart within the two previous Federal Fiscal Years.

(iii)No prior awards (15 points). The Applicant has never been approved for a Federal Award under this subpart.

(6)Simple payback (0-15 points). The Agency will award points as described in this paragraph (d)(6).

(i)EEI. The Agency will award points based on the Simple Payback of the EEI. Equation 3 to Paragraph (d)(6)(i) Simple Payback = (Project Cost) ÷ (dollar value of energy saved). Table 3 to Paragraph (d)(6)(i) Simple payback Points awarded More than 12 0 At least 8 and up to 12 5 At least 4 and up to 7 10 Less than 4 15

(ii)RES. The Agency will award points based on the Simple Payback of the RES as described in this paragraph (d)(6)(ii). Equation 4 to Paragraph (d)(6)(ii) Simple Payback = (Project Cost) ÷ (dollar value of energy units replaced, credited, sold, or used and fair market value of Byproducts as applicable in a typical year). Table 4 to Paragraph (d)(6)(ii) Simple payback Points awarded More than 25 years 0 At least 15 and up to 25 5 At least 10 and up to 14 10 Less than 10 15

4280.141Application withdrawal.#

During the period between the submission of an application and award approval, the Applicant must notify the Agency in writing if the Project is no longer viable or the Applicant no longer is requesting financial assistance for the Project. When the Applicant notifies the Agency, the selection will be withdrawn from consideration for funding.

4280.142-4280.149-4280.149 [Reserved]#

4280.150Award selection.#

(a)Applications requesting $20,000 or less. Applications requesting $20,000 or less and submitted by the deadline identified in § 4280.133(a)(1) will be funded in rank order until the available reserve has been expended or a minimum score of 40 points is reached. No application is guaranteed funding.

(b)All other applications. For applications not competing for the reserved funds for applications requesting $20,000 or less, the Agency will first select the highest-scoring application from each State (where Puerto Rico, the Virgin Islands, and the Western Pacific are each considered a State) in rank order and available funds permitting, provided that no application scores lower than 40 points. If more than $100 million is available, the Agency will first select the top two highest-scoring applications from each State (where Puerto Rico, the Virgin Islands, and the Western Pacific are each considered a State) in rank order and available funds permitting, provided that no application scores lower than 40 points. Then applications will be funded in rank order until available funds have been expended or a minimum score of 40 points is reached. No application is guaranteed funding.

4280.151Notification of successful applicants.#

The following process will be used to notify Applicants whose applications are selected for funding.

(a)Notification. The Agency will notify the Applicants whose applications can be funded using available funds with an LOC. The LOC will provide the conditions under which an award can be approved as well as a copy of the terms of the award.

(b)Meeting the conditions of the Federal Award. An Applicant receiving an LOC will have 60 calendar days to meet the conditions of the Federal Award, unless otherwise specified in the LOC. If the Applicant does not meet the conditions within the specified time frame, the Agency will discontinue processing the application.

(c)Standard award terms and conditions. The standard award terms and conditions are available on the program website.

4280.152Notification of unsuccessful Applicants.#

Applicants whose applications are not eligible for financial assistance through this program, who are removed from funding consideration due to a high level of risk, or whose applications did not score high enough to be funded will be notified as soon as practicable. No further processing of the application will occur.

4280.153Award approval.#

This section applies to all awards made before or after October 1, 2026. Once the Applicant has met all the conditions specified in the LOC, the Agency will review the Federal Award for approval. The approval will be conveyed through the execution of Form RD 4280-2, which is the FAA, and provides all the terms of the Federal Award. Costs must be allowable and be incurred during the approved Project Period. Applications with a Form 1940-1 “Request for Obligation of Funds” signed by the Applicant and the Agency prior to the effective date of this regulation will continue to be processed, provided that their project remains in line with applicable terms and conditions. Each person or entity is subject to maximum amount of grant assistance per Federal fiscal year. Entities that share common management or ownership, regardless of percent owned, either directly or indirectly through another entity or person, are considered one entity for which aggregate funding cannot exceed the applicable dollar limit.

4280.154-4280.159-4280.159 [Reserved]#

4280.160Reporting requirements.#

Recipients are required to submit reports on financial status, performance, and Equipment, as described below.

(a)Financial report. A final financial report is due 120 calendar days after award approval. The report must include the submission of the SF-425, “Federal Financial Report,” and any additional information specified in Form RD 4280-2, “Financial Assistance Agreement.”

(b)Performance report. A final performance report is due 120 calendar days after award approval. The report must include the information specified in Form RD 4280-2, “Financial Assistance Agreement.”

(c)Equipment report. Equipment reporting procedures must be in compliance with 2 CFR 200.313 and are identified in Form RD 4280-2, “Financial Assistance Agreement.”

4280.161Monitoring awards.#

Awards will be monitored by the Agency in accordance with applicable laws, regulations, and policies. The Agency may terminate or suspend the award for lack of adequate or timely progress, reporting, documentation, or for failure to comply with Agency or award requirements.

4280.162Transfer of obligations.#

The Agency will not approve any transfer of obligations for this program.

4280.163-4280.198-4280.198 [Reserved]#

4280.199OMB control number.#

The reporting and recordkeeping requirements contained in this subpart have been approved by OMB and have been assigned OMB control number 0570-0067 in accordance with the Paperwork Reduction Act of 1995.

Subpart C · Subpart C—Rural Energy for America Program: Grants for Energy Audits and Renewable Energy Development Assistance

4280.201Purpose.#

This subpart contains the procedures and requirements for providing financial assistance under the Rural Energy for America Program (REAP) through grants to eligible entities to assist Agricultural Producers and Rural Small Businesses to become more energy efficient and to use Renewable Energy technologies and resources.

4280.202Organization of subpart.#

The information in this subpart is organized into six main topics.

(a)General information. Sections 4280.201 through 4280.219 discuss the purpose of the program, definitions, exception authority, conflict of interest, and compliance with other laws and regulations.

(b)Eligibility information. Sections 4280.220 through 4280.229 discuss the eligibility requirements for the program. These sections include information on Applicant eligibility, project eligibility, and the use of funds. See § 4280.222 for information about award amounts, Period of Performance, and Cost Sharing requirements.

(c)Application requirements information. Sections 4280.230 through 4280.239 discuss the requirements for submitting an application. These sections include information on what forms and other information are required for a complete application as well as the format of the application, the application submission deadline, and how to submit the application.

(d)Application processing information. Sections 4280.240 through 4280.249 discuss how the Agency will process applications. These sections include information on how applications will be reviewed for eligibility, how applications will be evaluated for merit, and how an Applicant can withdraw an application from consideration.

(e)Award information. Sections 4280.250 through 4280.259 discuss how the Agency will make awards. These sections include information about how applications will be selected for funding, how Applicants will be notified whether their applications have been selected for funding, how Applicants can resolve disputes regarding funding selections, and the requirements for an Applicant to accept an award and be approved as a Recipient of an award.

(f)Post-award information. Sections 4280.260 through 4280.261 discuss the reporting requirements for Recipients after an award is approved as well as monitoring procedures that the Agency will use.

(g)Other. (1) Sections 4280.262 through 4280.298 are reserved.

(2)Section 4280.299 includes the Office of Management and Budget (OMB) control number for reporting and recordkeeping requirements under this subpart.

4280.203Acronyms.#

(a)BESS—Battery Energy Storage System.

(b)CFR—Code of Federal Regulations.

(c)COI—Conflict of Interest.

(d)EA—Energy Audit.

(e)EEI—Energy Efficiency Improvement.

(f)FAA—Financial Assistance Agreement.

(g)LOC—Letter of Conditions.

(h)REDA—Renewable Energy Development Assistance.

(i)RES—Renewable Energy System.

(j)SAM—System for Award Management.

(k)UEI—Unique Entity Identifier.

(l)U.S.C.—United States Code.

(m)USDA—United States Department of Agriculture.

4280.204Definitions.#

These are the definitions for terms used in this subpart. See also the defined terms located at 7 CFR 4280.104. All defined terms used in this subpart are capitalized. Council has the meaning located under the Resource Conservation and Development Program, at 16 U.S.C. 3451. Institution of Higher Education (IHE) has the meaning given the term in section 1002(a) of Title 20. Instrumentality means an organization recognized, established, and controlled by a State, Indian Tribal, or Local Government, for a public purpose or to carry out a special purpose. Key personnel means the owners, employees, new hires, consultants, and/or contractors who will be overseeing and/or completing the tasks in the work plan. Nonprofit organization has the meaning located at 2 CFR 200.1. Period of performance has the meaning located at 2 CFR 200.1. Public power entity has the meaning located at 16 U.S.C. 824q(a)(4). Renewable Energy site assessment means a structured and methodical evaluation process designed to determine the feasibility and potential of Renewable Energy resources within a defined scope, particularly with respect to sustainability. This assessment examines resource availability, technological maturity, economic viability, and environmental implications. It is site specific and considers historical energy consumption of the Agricultural Producer or Rural Small Business. It investigates how a Renewable Energy System could replace the historical energy use or how the RES could generate an increase in revenue to support the sustainability of the operation. Renewable energy development assistance (REDA) means technical assistance provided to Agricultural Producers and Rural Small Businesses on how to use Renewable Energy technologies and resources in their operations through conducting a Renewable Energy Site Assessment, Resource Assessment, and Feasibility Studies. Ultimate beneficiary means an entity that on whose behalf the Energy Audit or Renewable Energy Development Assistance is conducted.

4280.205[Reserved]#

4280.206Conflict of interest.#

No conflict of interest will be allowed.

(a)Description. A conflict of interest (COI) occurs when an individual or entity has a competing personal, professional, or financial interest that makes it difficult for the individual or entity to act impartially

(b)Recipient conflicts of interest. Recipients must comply with 2 CFR 400.2, regarding written disclosure, employee and organizational conflicts of interest, and internal controls.

(c)Assistance to employees, relatives, and associates. The Agency will process any requests for financial assistance under this subpart in accordance with 7 CFR part 1900, subpart D.

4280.207[Reserved]#

4280.208Compliance with other laws and regulations.#

Applicants and Recipients must comply with all applicable laws and regulations.

4280.209-4280.219-4280.219 [Reserved]#

4280.220Applicant eligibility.#

Applicants must meet the following requirements to be eligible for financial assistance through this program.

(a)Eligible entities. Entities are eligible for financial assistance through this program if all the following requirements are met.

(1)System for Award Management (SAM) registration and Unique Entity Identifier (UEI). An Applicant and a Recipient must have an active registration in SAM. This registration must remain current, accurate, and complete at the time of application, while the application is under consideration for funding, and while the Recipient has an active Federal Award. This registration includes obtaining a UEI, or its successor, and completing the process for Federal Assistance registration through SAM.gov.

(2)Legal authority. An Applicant must have the legal authority necessary to apply for and carry out the purpose of the Federal Award.

(3)Entity type. An Applicant must be one of the following entity types:

(i)A unit of State government, Indian Tribal government, or Local Government;

(ii)An Institution of Higher Education; including land grant colleges and universities;

(iii)A Rural electric cooperative;

(iv)A Public Power Entity;

(v)An Instrumentality; or

(vi)A Council.

(4)Number of Awards. An Applicant is only eligible for one award per Federal Fiscal Year.

(b)Ineligible entities. Entities are ineligible for financial assistance through this program if any of the following occurs:

(1)Outstanding judgment. An outstanding judgement has been obtained against the entity by the United States in a Federal Court (other than in the United States Tax Court). The entity is ineligible for assistance until the judgment is paid in full or otherwise satisfied. Funds from this program may not be used to satisfy the judgment.

(2)Federal income tax delinquency. The entity is delinquent on the payment of Federal income taxes.

(3)Federal debt delinquency. The entity is delinquent on a Federal debt.

(4)Debarment or suspension. The entity is debarred or suspended or is otherwise excluded from or ineligible for participation in Federal assistance programs under Executive Order 12549, “Debarment and Suspension.” (See 2 CFR part 417.)

(5)Felony criminal violation. The entity has been convicted of a felony criminal violation under any Federal law within the past 24 months.

(6)Unpaid Federal tax liability. The entity has any unpaid Federal tax liability that has been assessed, for which all judicial and administrative remedies have been exhausted or lapsed, and that is not being paid in a timely manner pursuant to an agreement with the authority responsible for collecting the tax liability, unless a Federal agency has considered suspension or debarment of the organization and has made a determination that this further action is not necessary to protect the interests of the Government.

(7)Active REAP EA/REDA or REAP TAG Award. The entity has an award through the REAP EA/REDA program in this subpart or the REAP Technical Assistance Grant (TAG) program for which the Period of Performance is scheduled to end after September 30 of the Federal Fiscal Year in which the application is submitted.

(8)Nonprofit Organization. The entity is a Nonprofit Organization of a type not listed in § 4280.220(a)(3).

(9)Individual. The entity is an individual.

(10)Foreign ownership. If the entity has foreign investment or ownership, the Agency will evaluate the entity's ability to participate in the Rural Energy for America Program consistent with applicable law. Entities that are headquartered in countries determined to be foreign adversaries as defined by 15 CFR 791.4, are not eligible to participate in the program.

4280.221Ultimate Beneficiary eligibility.#

Ultimate Beneficiaries must meet all of the following requirements to receive assistance through Recipients of this program.

(a)Type of entity. Ultimate Beneficiaries must be Agricultural Producers or Rural Small Businesses.

(b)Location. Ultimate Beneficiaries must have a place of business located in a State, and the assistance must be provided to them at that location.

(c)Cost Sharing. Ultimate Beneficiaries must provide at least 25 percent of the cost of an Energy Audit.

4280.222Project eligibility.#

Projects must meet the following requirements to be considered for financial assistance through this program.

(a)Eligible Projects. Eligible Projects must meet all of the following requirements. Failure to meet one or more of these requirements means the application is not eligible for funding.

(1)Project purpose. The purpose of the Project must be to assist Agricultural Producers or Rural Small Businesses by conducting Energy Audits, Renewable Energy Site Assessments, Resource Assessments, and Feasibility Studies.

(2)Project location. The project location is required to be in a Rural area, as defined in 7 CFR 4280.104, within a State.

(3)Amount requested. The maximum amount that can be requested is $100,000.

(4)Cost Sharing. No Cost Sharing is required from the Recipient, although the contribution of Cost Sharing is part of the merit evaluation process. See § 4280.240(d) for more information on the merit evaluation process. See § 4280.221(c) for the requirement for Ultimate Beneficiaries. The Cost Sharing obtained under § 4280.221(c) shall be retained by the Recipient to cover part of the cost of the Energy Audit. It is considered program income and must be used to further the objectives of the Project during the Period of Performance. If it cannot be used in this manner, it must be applied to the Federal Award under this subpart in accordance with 2 CFR 200.307(b)(1). Unrecovered indirect costs are not allowed as Cost Sharing.

(5)Allowable use of funds. The Project must use award funds and Cost Sharing for allowable purposes. See § 4280.225 for additional information.

(6)Period of Performance. The Period of Performance is one year.

(b)Ineligible Projects. The following types of projects are not eligible for financial assistance through this program.

(1)Amount requested. Requests more than the maximum grant amount;

(2)Research and development. Projects including theoretical and/or applied research;

(3)Feasibility Studies. Projects involving state-wide or non-site-specific Feasibility Studies.

(4)Ineligible Entities. Projects providing assistance to entities other than Agricultural Producers or Rural Small Businesses.

(5)Computer software. Projects including developing computer software or programs.

(6)Residential. Projects providing EA or REDA for residential purposes.

(7)Unallowable costs. Projects including unallowable costs exceeding 10 percent of the Federal Award Amount requested. If 10 percent or less of the Project budget includes unallowable costs, the unallowable costs will be removed. If the Agency cannot identify what percentage of costs are unallowable, the application will be considered ineligible for funding.

(8)Conflict of interest. Projects including a conflict of interest. See § 4280.206 for more information on conflict of interest.

4280.223-4280.224-4280.224 [Reserved]#

4280.225Use of funds.#

See the Cost Principles located at 2 CFR part 200, subpart E. Additional information about allowable and unallowable uses of funds are described as follows.

(a)Allowable uses of funds. The following categories of expense are allowable, provided that they are incurred after a Federal Award has been approved under this subpart.

(1)Salaries;

(2)Fringe benefits;

(3)Travel expenses;

(4)Office supplies;

(5)Contractual expenses for qualified contractors to perform EA and REDA; and

(6)Indirect costs up to five percent of the Federal Award made under this subpart. Note that this limitation is statutory and is in effect regardless of whether the Applicant has a Negotiated Indirect Cost Rate Agreement with the Federal government.

(b)Unallowable uses of funds. The following categories of expense are not allowable.

(1)Real Property purchase or improvements;

(2)Building or facility planning, developing, repair, rehabilitation, or acquisition;

(3)Equipment purchase, lease, or installation, that is not part of the RES or EEI;

(4)Vehicle purchase or repair;

(5)Construction and construction-related activities;

(6)Cost of preparing the application for financial assistance under this subpart;

(7)Any expenses not directly related to the funded Project;

(8)Payment or waiver of student tuition, including for graduate students;

(9)Costs associated with training individuals to become qualified to conduct EA or REDA;

(10)Promotional items including, but not limited to, pens, cups, apparel, magnets, and decorations.

(11)Raffles;

(12)More than 10 percent of Project Costs for outreach and marketing of the Recipient's available services under the proposed work plan;

(13)More than 5 percent of the Federal Award amount requested for indirect costs;

(14)Goods and services provided by an individual or entity that has a conflict of interest, as described in § 4280.206;

(15)Payment of any judgment or debt owed to the United States;

(16)Political or lobbying activities, consistent with 31 U.S.C. 1352 (g)(1); and

(17)Activities considered unallowable by the applicable cost principles, mostly of which are included in 2 CFR part 200, subpart E.

4280.226-4280.230-4280.230 [Reserved]#

4280.231Application requirements.#

This section identifies the items required for a complete application. Each Applicant can only submit one application for EA or for REDA.

(a)Applicant Eligibility. The following requirements must be submitted to support Applicant eligibility:

(1)Form SF-424. The Applicant must submit the Form SF-424, “Application for Federal Assistance.”

(2)Entity Type. Applicant must demonstrate how they qualify as one of the following entity types:

(i)A unit of State government, Indian Tribal government, or Local Government;

(ii)An Institution of Higher Education; including land grant colleges and universities;

(iii)A Rural electric cooperative;

(iv)A Public Power Entity;

(v)An Instrumentality; or

(vi)A Council.

(3)Conflict of interest. The Applicant must identify whether or not the Applicant or its individual owners has a known relationship or association with an Agency or Rural Development employee. If there is a known relationship, the Applicant must identify each Agency or Rural Development employee with whom the Applicant has a known relationship. The Applicant must also certify that there is no conflict of interest, as described in § 4280.206.

(4)Summary of REAP awards. The Applicant must describe any current or previous awards received through the REAP EA REDA and REAP TAG programs. The description must include the Period of Performance, the amount, and a summary of the Project.

(b)Project Eligibility. The following requirements must be submitted to support Project eligibility.

(1)Work plan. A proposed work plan for the proposed Project, including the following items:

(i)Project title. Provide a title for the proposed Project.

(ii)Project description. The Project description must include a brief summary of the type of service(s) to be provided, the service area, and the type and number of Ultimate Beneficiaries to be served.

(iii)Goals. Provide a description of the goals of the Project.

(iv)Service area. Provide the following information about the proposed service area:

(A)Description of the service area, including the State(s) served, the total number of counties in the State(s), as well as the number of counties served in each State;

(B)The reason(s) the service area was selected; and

(C)The needs of the service area.

(v)Ultimate Beneficiaries. Provide the following information about the Ultimate Beneficiaries:

(A)If selected at the time of application, a list of Agricultural Producers and Rural Small Businesses to be served, including which type of Ultimate Beneficiary they are and the names and locations (city, state) of the Ultimate Beneficiaries;

(B)The methodology used or that will be used to select the Ultimate Beneficiaries; and

(C)Written commitments from Ultimate Beneficiaries, if selected at the time of application.

(vi)Services. Provide the following information for each proposed service.

(A)A description of the service;

(B)The time period during which the service is expected to be accomplished;

(C)The Key Personnel who will be responsible for completing the service; and

(D)The potential environmental benefits from the proposed services.

(vii)Outreach plan. Provide an outreach plan that describes the actions the Applicant plans to take to ensure that the proposed services are marketed to Agricultural Producers and/or Rural Small Businesses in the service area. This must include the marketing and outreach strategies and goals. The Applicant must provide data that supports these strategies and goals. If the Ultimate Beneficiaries are already selected, describe how the services were marketed to select those entities.

(viii)Applicant experience. Provide the following information regarding the Applicant's experience.

(A)Past services. Provide a description of similar services completed in the past, including the following:

(1)The number of commercial EA or REDA provided directly to Agricultural Producers and/or Rural Small Businesses in the past;

(2)A description of the energy savings or energy generation resulting from previous EA or REDA activities with Agricultural Producers and/or Rural Small Businesses. The energy savings or energy generation must be quantified in units of the appropriate energy measurement;

(3)The time period that the Applicant performed the similar services.

(B)Example of past service. Provide a copy of at least one EA, Renewable Energy Site Assessment, Resource Assessment, or Feasibility Studies that the Applicant has completed within the last year. If the example provided does not meet one of the definitions identified in the previous sentence, the application will be considered incomplete and not eligible for funding. See § 4280.240 for how these examples will be used for the merit evaluation.

(ix)Budget. The Applicant must provide a detailed breakdown of all estimated Project Costs including the Federal Award and Cost Sharing, including the following:

(A)The names of Key Personnel and each individual's salaries and fringe benefits, including hourly rate/annual salary and what is included in fringe benefits;

(B)Descriptions of trips to be taken, including who is traveling, the purpose of the travel, and the cost of each trip;

(C)An itemized list of office supplies to be purchased and their purpose; and

(D)An itemized list of contracts, including vendor, purpose, and amount.

(2)Cost Sharing. Cost Sharing is not required for the program, but it is considered as part of the merit evaluation process (see § 4280.240(d) for more information). Cost Sharing must be in cash from the Applicant or from a third-party and must be committed in writing to the Project at the time of application. The commitment must demonstrate that funds will be available during the proposed Period of Performance, can be used for allowable costs identified in the proposed scope of work, and be signed by an authorized representative of the source of the funding.

(3)Financial statements. The Applicant must provide the following business-level financial statements: income statement, balance sheet, and statement of cash flows, from the Applicant's most recent completed fiscal year prior to the date of application.

4280.232[Reserved]#

4280.233Submission requirements.#

The following information identifies when applications can be submitted, where applications must be submitted, and the format of the applications.

(a)Submission period. The application period will be published by the agency and will close at 5:00 p.m. Eastern time on the published deadline. Applications received prior to the opening date or after the closing date will not be considered for funding.

(b)Submission address. Applications must be submitted electronically through Grants.gov, unless otherwise stated in the annual Notice.

(c)Submission format. All items required for the application must be submitted in a single application. No attachments other than the required items will be considered.

(d)Number of applications. No more than one application from each Applicant will be accepted.

4280.234-4280.239-4280.239 [Reserved]#

4280.240Application processing.#

The following information describes the way the Agency will process applications. Applications will be evaluated for completeness, eligibility, risk, and merit.

(a)Completeness evaluation. The Agency will review all submitted applications for completeness. Applications must include all information needed to assess eligibility, risk, and merit, including all of the requirements identified in § 4280.231, to be further processed for eligibility, risk, and merit evaluations. The Agency will notify Applicants who submitted incomplete applications in accordance with § 4280.252.

(b)Eligibility evaluation. The Agency will review all complete applications to determine if they are eligible for assistance based on the requirements in this subpart and other applicable laws and regulations. As part of this process, the Agency will check the OMB-designated repository of government information, and Applicants that are excluded from Federal financial assistance will be determined ineligible (see 2 CFR 200.206 for more information). Applications that do not meet one or more eligibility requirements will not be further processed for risk and merit evaluations. The Agency will notify Applicants who submitted ineligible applications in accordance with § 4280.252.

(c)Risk evaluation. The Agency will review all eligible applications for risk based on the financial and performance factors described in paragraphs (c)(1) and (2) of this section. Principals for the Applicant and Project will be evaluated for risk based on paragraph (c)(3) of this section.

(1)Financial risk. The Agency will review the Applicant's most recent independent audit (if available) and financial statements. The Applicant's financial solvency, internal controls, and any audit findings will be assessed. Applicants whose, ratio of current assets to current liabilities, is not at least 1:1 will be considered too high of a risk to fund and will be notified that the application cannot be funded and will issue a written notification in accordance with § 4280.252. Other types of deficiencies or risks will be assessed on a case-by-case basis. The Agency will consider reasonable options to mitigate identified risks, such as payment by reimbursement and more frequent reporting requirements. However, for deficiencies and risks that are significant or cannot be reasonably mitigated, the Agency will determine that the application cannot be funded and will issue a written notification in accordance with § 4280.252.

(2)Performance risk evaluation. The Agency will review any Federal Awards received during the five years prior to the application deadline through SAM (or its successor system), the Do Not Pay system (or its successor system), any other available Federal or Departmental level award or performance systems, and the Agency's internal financial record-keeping systems and files. The Applicant's ability to submit required reports and documents, complete approved tasks on time, meet approved budget requirements, and proper use of Project funds will be evaluated.

(i)Performance deficiencies. Applicants with more than two Federal Awards with performance deficiencies will be considered too high of a risk to be funded and will be notified in accordance with § 4280.252. Examples of performance deficiencies include, but are not limited to, reports that are more than 60 days overdue, failure to execute the approved work plan and budget by the end of an approved Period of Performance, deliverables that do not meet Agency definitions and standards, and submission of more than 10 percent of the approved budget for unallowable costs. Other types of deficiencies or risks will be assessed on a case-by-case basis.

(ii)Mitigation of risk. The Agency will consider reasonable options to mitigate identified risks, such as payment by reimbursement and more frequent reporting requirements. However, for deficiencies and risks that are significant or cannot be reasonably mitigated, the Agency will determine that the application cannot be funded and will issue a written notification in accordance with § 4280.252.

(d)Merit evaluation. The Agency will conduct a merit evaluation for those applications that are determined eligible for the program, unless a risk evaluation determines that the application cannot be funded (see § 4280.240(c)). The merit evaluation will be conducted by USDA employees, who will score the application based on the criteria below. The total points available are 100. The application must score at least 40 points to be eligible for funding.

(1)Applicant experience (0-15 points). The Agency will use the information provided in the application under § 4280.231(b)(1)(viii)(B) to evaluate this criterion. The Agency will award points based on the quality of the EA or REDA work products that are submitted. A quality work product is one that meets the definition of EA, Renewable Energy Site Assessment, Resource Assessment, or Feasibility Study. If the Applicant is applying for an EA award, the work product submitted must be one or more EAs. If the Applicant is applying for a REDA award, the work product submitted must be one or more Renewable Energy Site Assessments, Resource Assessments, or Feasibility Studies.

(i)One quality work product (0 points). The Agency will award zero points if the Applicant submits only one EA or REDA quality work product in providing the proposed services because this is the baseline for eligibility for the program.

(ii)Two quality work products (5 points). The Agency will award five points if the Applicant submits two quality work products that meet the definition of either an EA, Renewable Energy Site Assessment, Resource Assessment, or Feasibility Study, as applicable.

(iii)Three quality work products (10 points). The Agency will award 10 points if the Applicant submits three quality work products that meet the definition of either an EA, Renewable Energy Site Assessment, Resource Assessment, or Feasibility Study, as applicable.

(iv)Four quality work products (15 points). The Agency will award 15 points if Applicant submits four quality work products that meet the definition of either an EA, Renewable Energy Site Assessment, Resource Assessment, or Feasibility Study, as applicable.

(2)Service area (0-25 points). The Agency will use the information provided in the application under § 4280.231(b)(1)(iv) to evaluate this criterion. The Agency will award points based on the identified need of the Ultimate Beneficiaries and the area of the State covered as follows:

(i)Identified need (0-5 points). The Agency will award 0—5 points, with more points for those applications that describe how the service area was determined, based on the identified need(s) of the Ultimate Beneficiaries.

(ii)Fewer than 10 percent of counties (0 points). The Agency will award 0 points for Projects with a proposed service area that includes less than 10 percent of the counties in a single State.

(iii)10-24 percent of counties (5 points). The Agency will award 5 points for Projects with a proposed service area that includes more than 10 percent, but less than 25 percent, of the counties in a single State.

(iv)25-49 percent of counties (10 points). The Agency will award 10 points for Projects with a proposed service area that includes at least 25 percent, but less than 50 percent, of the counties in a single State.

(v)50-74 percent of counties (15 points). The Agency will award 15 points for Projects with a proposed service area that includes at least 50 percent, but less than 75 percent, of the counties in a single State.

(vi)75-100 percent of counties or multi-state (20 points). The Agency will award 20 points for Projects with a proposed service area that includes at least 75 percent of the counties in a single State or when in more than one State, includes at least 50 percent of counties in each State.

(3)Number of Ultimate Beneficiaries to be served (0-10 points). The Agency will use the information provided in the application under § 4280.231(b)(1)(v) to evaluate this criterion. The Agency will award points as follows:

(i)Less than 5 Ultimate Beneficiaries (0 points). The Agency will award zero points for applications that propose to assist less than five Ultimate Beneficiaries.

(ii)5-9 Ultimate Beneficiaries (2 points). The Agency will award two points for applications that propose to assist less than 10 Ultimate Beneficiaries.

(iii)10-25 Ultimate Beneficiaries (5 points). The Agency will award five points for Projects that propose to assist at least 10 and no more than 25 Ultimate Beneficiaries.

(iv)More than 25 Ultimate Beneficiaries (10 points). The Agency will award 10 points for Projects that propose to assist more than 25 Ultimate Beneficiaries.

(4)Commitment of Ultimate Beneficiaries (0-10 points). The Agency will use the information provided in the application under § 4280.231(b)(1)(v)(C) to evaluate this criterion. The Agency will award points as follows:

(i)Less than 5 commitments (0 points). The Agency will award zero points for applications that provide written commitments from less than five of the Ultimate Beneficiaries that are identified in the proposed work plan.

(ii)5-10 commitments (2 points). The Agency will award two points for applications that provide written commitments from five to ten of the Ultimate Beneficiaries that are identified in the proposed work plan.

(iii)11-15 commitments (5 points). The Agency will award five points for applications that provide written commitments from 11 to 15 of the Ultimate Beneficiaries that are identified in the proposed work plan.

(iv)16-20 commitments (8 points). The Agency will award eight points for applications that provide written commitments from 16 to 20 of the Ultimate Beneficiaries that are identified in the proposed work plan.

(v)21 or more commitments (10 points). The Agency will award 10 points for applications that provide written commitments from 21 or more of the Ultimate Beneficiaries that are identified in the proposed work plan.

(5)Potential of project to produce energy savings or generation and environmental benefits (0-10 points). The Agency will use the information provided in the application under § 4280.231(b)(1)(viii)(B) to evaluate this criterion. The Agency will award points based on the potential of the proposed Project to produce energy savings and environmental benefits as follows:

(i)Energy savings or energy generation (0-5 points). The Agency will award zero to five points for Projects that demonstrate a clear potential for energy savings or energy generation based on services provided. Zero points will be awarded if the application does not include energy information on energy savings for the proposed services.

(A)EA.

(1)0 points will be awarded if the application does not address § 4280.231(b)(1)(viii)(A)(2) or properly meet the definition of EA.

(2)Up to 5 points will be awarded if the Applicant's work product meets the definition of EA.

(B)REDA.

(1)0 points will be awarded if the application does not address § 4280.231(b)(1)(viii)(A)(2) or properly meet the definition of Feasibility Study, Renewable Energy Site Assessment or Resource Assessment as applicable.

(2)Up to 5 points will be awarded if the Applicant's work product meets the definition of Feasibility Study, Renewable Energy Site Assessment or Resource Assessment as applicable.

(ii)Environmental benefits (0-5 points). The Agency will award zero to five points for Projects that demonstrate potential for environmental benefits based on the proposed services. Examples of environmental benefits are conserving Cropland, forests, and water; improving air and water quality; and meeting renewable fuel standards. Zero points will be awarded if the application does not include information on environmental benefits for the proposed services. One to two points will be awarded if the application includes general information about the potential environmental benefits for the proposed services. Three to four points will be awarded if the application includes quantitative measures for the potential environmental benefits for less than 75 percent of the proposed services. Five points will be awarded if the application includes quantitative measures for the potential environmental benefits for at least 75 percent of the proposed services.

(6)Outreach and information (0-10 points). The Agency will use the information provided in the application under § 4280.231(b)(1)(vii) to evaluate this criterion. The Agency will award points based on the plan of the Applicant for performing outreach and providing information and assistance to Agricultural Producers and Rural Small Businesses on the benefits of energy efficiency and Renewable Energy development. Points will be awarded as follows:

(i)Strategies (0-5 points). The Agency will award zero to five points for the strategies that the Applicant proposes to use to perform outreach and provide information and assistance. Strategies that are more comprehensive and better targeted to eligible Ultimate Beneficiaries in the service area will receive more points. Strategies include methods and frequency of communication, technology, locations, and timing. Zero points will be awarded if the application does not include at least one strategy. One or two points will be awarded if the application has at least one strategy identified. Three or four points will be awarded if the application identifies at least two strategies that are well-targeted to the service area and intended Ultimate Beneficiaries. Five points will be awarded if the application identifies at least three strategies that are well-targeted to the service area and the intended Ultimate Beneficiaries.

(ii)Goals (0-5 points). The Agency will award zero to five points for the goals the Applicant proposes to use for its outreach. Goals that are clear and include a way to measure the success of the outreach plan in a quantitative way, including a baseline and target for the measurement will receive more points. Zero points will be awarded if the application does not include at least one goal, performance measurement, baseline of the metric, and target for the metric. One or two points will be awarded if the application has at least one goal, one metric, the baseline of the metric, and a target for the metric. Three or four points will be awarded to applications that exceed this threshold. Five points will be awarded to applications that exceed the threshold and have exceptional goals, metrics, baselines, and targets.

(7)Cost sharing (0-20 points). The Agency will use the information provided in the application under § 4280.231(b)(2) to evaluate this criterion. The Agency will award points based on the ability of the Applicant to leverage other sources of funding as Cost Sharing for the Project. To be awarded points for this criterion, Cost Sharing must be in cash from the Applicant or from a Third-Party and must be committed in writing to the Project at the time of application. Unrecovered indirect costs cannot be used as Cost Sharing. The commitment must demonstrate that funds will be available during the proposed Period of Performance, can be used for allowable costs identified in the proposed scope of work, and be signed by an authorized representative of the source of the funding. Note that Cost Sharing provided by an Ultimate Beneficiary for the purpose of an Energy Audit is not considered for this criterion because it is required by statute. Points will be awarded as follows. Note that the Agency will use normal rounding procedures, where 4 and below is rounded down and 5 and above is rounded up. Table 1 to Paragraph (d)(7) Cost share amount as percentage of award amount Points awarded 5.4% or less 0 5.5-10.4% 5 10.5-25.4% 10 25.5%-50.4% 15 50.5% or more 20

4280.241Application withdrawal.#

During the period between the submission of an application and award approval, the Applicant must notify the Agency in writing if the Project is no longer viable or the Applicant no longer is requesting financial assistance for the Project. When the Applicant notifies the Agency, the application will be withdrawn from consideration for funding.

4280.242-4280.249-4280.249 [Reserved]#

4280.250Award selection.#

Applications that have been fully processed and are determined to be complete, eligible for funding, and are not removed from consideration due to high risk will be evaluated based on the merit evaluation criteria and priority criteria (see § 4280.240). The points awarded for merit evaluation and priority criteria will be added for each application. Applications will then be ranked solely based on the points awarded. The Agency will first select the top two highest-scoring applications from each State (where Puerto Rico, the Virgin Islands, and the Western Pacific are each considered a State), as long as the top two highest-scoring applications score at least 40 points. Applications that score below 40 points will not be selected for funding, regardless of their ranking. Then the Agency will select applications for funding based on rank order until available funds have been expended or a minimum score of 40 points is reached. If funding still remains the Agency may select the next highest scoring applications from the field.

4280.251Notification of successful Applicants.#

The following process will be used to notify Applicants whose applications are selected for funding.

(a)Notification. The Agency will notify the Applicants whose applications can be funded using available funds with a Letter of Conditions (LOC). The LOC will provide the conditions under which an award can be approved as well as a copy of the terms of the award.

(c)Standard award terms and conditions. The standard award terms and conditions are available on the program website.

4280.252Notification of unsuccessful Applicants.#

Applicants whose applications are not eligible for financial assistance through this program, who are removed from funding consideration due to a high level of risk, or whose applications did not score high enough to be funded will be notified as soon as it is practicable. No further processing of the application will occur.

4280.253Award approval.#

The Agency will approve a Federal Award once the Applicant has met all the conditions specified in the LOC. The approval will be conveyed through the execution of a Form RD 4280-2, which is the FAA, and provides all the terms of the Federal Award. Once the Federal Award has been approved, the Recipient must begin work on the Project and incur costs as described in the approved work plan and budget, which are attached to Form RD 4280-2. Costs must be allowable and be incurred during the approved Period of Performance.

4280.254-4280.259-4280.259 [Reserved]#

4280.260Reporting requirements.#

Recipients are required to submit reports on financial status and performance, as described below.

(a)Financial reports. Financial reports must be submitted using Form SF-425 and any additional information specified in the Financial Assistance Agreement (FAA).

(1)Semi-annual. Semi-annual financial reports are due 30 calendar days after the reporting period ends, or as directed by 2 CFR 200.328(c). The reporting periods are October 1-March 31 and April 1-September 30.

(2)Final. A final financial report is due 120 calendar days after the Period of Performance ends, or the Project is completed, whichever occurs sooner, or as directed by 2 CFR 200.328(c).

(b)Performance report. Performance reports must include the information specified in the FAA. Typically, performance reports are required to include a description of the objective(s) for the reporting period; whether the objective(s) were met and if not, what action is being taken to ensure the objective(s) is met during the next reporting period; and all written work product(s) such as copies of Energy Audits, Renewable Energy Site Assessments, Resource Assessments, and Feasibility Studies to demonstrate that the objective was carried out.

(1)Semi-annual. Semi-annual performance reports are due 30 calendar days after the reporting period ends, or as directed by 2 CFR 200.329(c). The reporting periods are October 1-March 31 and April 1-September 30.

(2)Final. A final performance report is due 120 calendar days after the Period of Performance ends, or the Project is completed, whichever occurs sooner, or as directed by 2 CFR 200.329(c).

4280.261Monitoring awards.#

Awards will be monitored by Agency personnel in accordance with applicable laws, regulations, and policies. The Agency may terminate or suspend the award for lack of adequate or timely progress, reporting, documentation, or for failure to comply with Agency or award requirements.

4280.262-4284.298-4284.298 [Reserved]#

4280.299OMB control number.#

Subpart D · Subpart D—Rural Microentrepreneur Assistance Program

4280.301Purpose and scope.#

(a)This subpart contains the policies and procedures by which the Agency will administer the Rural Microentrepreneur Assistance Program (RMAP). The purpose of the Program is to support the development and ongoing success of rural microentrepreneurs and microenterprises. To accomplish this purpose, the Program will make direct loans and provide grants to selected Microenterprise Development Organizations. Selected Microenterprise Development Organization will use the funds to:

(1)Provide microloans to rural microentrepreneurs and microenterprises;

(2)Provide business-based training and technical assistance to rural microborrowers and potential microborrowers as an essential part of the microlending process;

(3)Perform other such activities as deemed appropriate by the Secretary to ensure the development and ongoing success of rural microenterprises.

(b)The Agency will make direct loans to microlenders for the purpose of providing fixed interest rate microloans to rural microentrepreneurs for business startup and for growing microenterprises in compliance with §§ 4280.311 and 4280.312. Eligible microlenders will also be eligible to receive microlender technical assistance grants to provide technical assistance and training to microenterprises that have received or are seeking a microloan under this program in compliance with § 4280.313.

(c)To allow for extended opportunities for technical assistance and training, the Agency will make technical assistance-only grants to Microenterprise Development Organizations that have sources of funding other than program funds for making or facilitating microloans.

4280.302Definitions and abbreviations.#

(a)General definitions. The following definitions apply to the terms used in this subpart. Administrative expenses. Those expenses incurred by a Microenterprise Development Organization for the operation of services under this program. Not more than 10 percent of technical assistance grant funds may be used for such expenses. Agency. USDA Rural Development, Rural Business-Cooperative Service or its successor organization. Agricultural production. The cultivation, growing, or harvesting of plants and crops (including farming), breeding, raising, feeding, or housing of livestock (including ranching). Applicant. The legal entity, also referred to as a Microenterprise Development Organization, submitting an application to participate in the program. Application. The required forms and documentation submitted by a Microenterprise Development Organization for acceptance into the program. Award. The written documentation, executed by the Agency after the application is approved, containing the terms and conditions for provision of financial assistance to the applicant. Financial assistance may constitute a loan or a grant, or both. Business incubator. An organization that provides temporary premises at below market rates, technical assistance in developing business or marketing plans, technical services, use of equipment, or other facilities or services to rural microentrepreneurs and microenterprises starting or growing a business. The business incubator may also provide access to capital through direct loans or referrals to loan programs. Close relative. Individuals who live in the same household or who are closely related by blood, marriage, or adoption, such as a spouse, domestic partner, parent, child, sibling, aunt, uncle, grandparent, grandchild, niece, nephew, or first cousin. Default. The condition that exists when a borrower is not in compliance with the promissory note, the loan and/or grant agreement, or other related documents evidencing the loan from the Agency or the Microenterprise Development Organization. Delinquency. Failure by a Microenterprise Development Organization or microborrower to make a scheduled loan payment by the due date or within any grace period as stipulated in the promissory note and loan agreement. Eligible project cost. The total cost of a microborrower's project for which a microloan is being sought from a microlender, less any costs identified as ineligible in § 4280.323. Facilitation of access to capital. For purposes of this program, facilitation of access to capital means assisting a client of the technical assistance only grantee in obtaining a microloan, whether or not the microloan is wholly or partially capitalized by funds provided under this program. Federal fiscal year (FY). The 12-month period beginning October 1 of any given year and ending on September 30 of the following year. Full-time equivalent employee (FTE). The Agency uses the Bureau of Labor Statistics definition of full-time jobs as its standard definition. For purposes of this program, a full-time job is a job that has at least 35 hours in a work week. As such, one full-time job with at least 35 hours in a work week equals one FTE; two part-time jobs with combined hours of at least 35 hours in a work week equals one FTE, and three seasonal jobs equals one FTE. If an FTE calculation results in a fraction, it should be rounded up to the next whole number. Indian tribe. Means the term as defined in 25 U.S.C. 5304(e). Loan loss reserve fund (LLRF). A deposit account that each microlender must establish and maintain in an amount equal to not less than 5 percent of the total amount owed by the microlender under this program to the Agency. This account can be used to pay any shortage in the rural microloan revolving fund caused by delinquencies or losses on microloans. Microborrower. A microentrepreneur or microenterprise that has received loans or financial assistance from a microlender under this program in an amount of $50,000 or less. Microenterprise. Microenterprise means:

(b)Abbreviations. The following abbreviations apply to the terms used in this subpart. FTE—Full-time employee. FY—Fiscal year. LLRF—Loan loss reserve fund. MDO—Microenterprise Development Organization. RMAP—Rural Microentrepreneur Assistance Program. RMRF—Rural microloan revolving fund. TA—Technical assistance.

(i)Provide training and technical assistance;

(ii)Make microloans or facilitate access to capital or other related services; and

(iii)Have a demonstrated record of delivering services to rural microentrepreneurs, or an effective plan to develop a program to deliver services to rural microentrepreneurs. Microentrepreneur. An owner and operator, or prospective owner and operator, of a rural microenterprise who is unable to obtain sufficient training, technical assistance, or credit other than under this section. All microentrepreneurs assisted under this regulation must be located in rural areas. Microlender. An MDO that has been approved by the Agency for participation under this subpart to make microloans and provide an integrated program of training and technical assistance to its microborrowers and prospective microborrowers. Microloan. A business loan of not more than $50,000 for eligible purposes to a microborrower with a fixed interest rate and a term not to exceed 10 years. Military personnel. Individuals, regardless of rank or grade, currently in active United States military service with less than 6 months remaining in their active duty service requirement. Nonprofit entity. An entity chartered as a nonprofit entity under State or Tribal Law. Program. The Rural Microentrepreneur Assistance Program (RMAP). Rural Microloan Revolving Fund (RMRF). An exclusive account on which the Agency will hold a first lien and from which microloans will be made by the MDO. All payments from microborrowers and reimbursements from the LLRF will be deposited into the RMRF account. Loan payments will be made to the Agency by the microlender from the RMRF. Rural or rural area. Any area of a State not in a city or town that has a population of more than 50,000 inhabitants, not in the urbanized area contiguous and adjacent to a city or town that has a population of more than 50,000 inhabitants, and excluding certain populations pursuant to 7 U.S.C. 1991(a)(13)(H) and (I). In making this determination, the Agency will use the latest decennial census of the United States. The following exclusions apply:

(i)Any area in the urbanized area contiguous and adjacent to a city or town that has a population of more than 50,000 inhabitants that is attached to the urbanized area of a city or town with more than 50,000 inhabitants by a contiguous area of urbanized census blocks that is not more than two census blocks wide. Applicants from such an area should work with their Rural Development State Office to request a determination of whether their project is located in a rural area under this provision.

(ii)For the Commonwealth of Puerto Rico, the island is considered Rural and eligible except for the San Juan Census Designated Place (CDP) and any other CDP with greater than 50,000 inhabitants. Areas within CDPs with greater than 50,000 inhabitants, other than the San Juan CDP, may be determined to be rural if they are “not urban in character.”

(iii)For the State of Hawaii, all areas within the State are considered rural and eligible except for the Honolulu CDP within the County of Honolulu and any other CDP with greater than 50,000 inhabitants. Areas within CDPs with greater than 50,000 inhabitants, other than the Honolulu CDP, may be determined to be rural if they are “not urban in character.”

(iv)For the purpose of defining a rural area in the Republic of Palau, the Federated States of Micronesia, and the Republic of the Marshall Islands, the Agency shall determine what constitutes rural and rural area based on available population data. 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 the Northern Mariana Islands, the Republic of Palau, the Federated States of Micronesia, and the Republic of the Marshall Islands. Technical assistance (TA) and training. A function performed for the benefit of a private business enterprise or a community which is a problem-solving activity such as market research, product and/or service improvement, feasibility study, worker training programs, etc., to assist in the economic development of a rural area. Technical assistance grant. A grant from the Agency, the funds of which are used to provide TA and training.

4280.303Exception authority.#

The Administrator may make limited exceptions to the requirements or provisions of this subpart. Such exceptions must be in the best financial interest of the Federal government and may not conflict with applicable law. No exceptions may be made regarding applicant eligibility, project eligibility, or the rural area definition. In addition, exceptions may not be made:

(a)To accept an applicant into the program that would not normally be accepted under the eligibility criteria; or

(b)To fund an interested party or applicant that has not successfully competed for funding in accordance with this subpart.

4280.304Review or appeal rights and administrative concerns.#

(a)Review or appeal rights. An applicant MDO, a microlender, or grantee MDO may seek a review of an adverse Agency decision under this subpart from the appropriate Agency official that oversees the program in question, and/or appeal the Agency decision to the National Appeals Division in accordance with 7 CFR part 11.

(b)Administrative concerns. Any questions or concerns regarding the administration of the program, including any action of the microlender, may be sent to: USDA Rural Development, Rural Business-Cooperative Service, Program Management Division at 1400 Independence Avenue SW, Room 5160-S, Mail Stop 3226, Washington, DC 20250-3226 or its successor agency, or the local USDA Rural Development office.

4280.305Nondiscrimination and compliance with other Federal laws.#

(a)Any entity receiving funds under this subpart must comply with other applicable Federal laws, including the Equal Employment Opportunities Act of 1972, the Americans with Disabilities Act, the Equal Credit Opportunity Act, the Civil Rights Act of 1964, Section 504 of the Rehabilitation Act of 1973, the Age Discrimination Act of 1975, and 7 CFR part 1901, subpart E.

(b)The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national origin, age, disability, and where applicable, sex, marital status, familial status, parental status, religion, sexual orientation, genetic information, political beliefs, reprisal, or because all or part of an individual's income is derived from any public assistance program. (Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact USDA's TARGET Center at (202) 720-2600 (voice and TDD). Any applicant that believes it has been discriminated against as a result of applying for funds under this program should contact: USDA, Director, Office of Adjudication, 1400 Independence Avenue SW, Washington, DC 20250-9410, or call (866) 632-9992 (toll free) or (202) 401-0216 (TDD) for information and instructions regarding the filing of a Civil Rights complaint. USDA is an equal opportunity provider, employer, and lender.

(c)A pre-award compliance review will take place at the time of application when the applicant completes or provides the Agency with sufficient demographic information to complete Form RD 400-8, “Compliance Review”. Post-award compliance reviews will take place once every three years after the beginning of participation in the program and until such time as a microlender leaves the program.

4280.306Forms, regulations, and instructions.#

Copies of all forms, regulations, and instructions referenced in this subpart are available in any Agency office, the Agency's website at: https://www.rd.usda.gov/page/regulations-and-guidance/ and for grants on the internet at www.grants.gov.

4280.307-4280.309-4280.309 [Reserved]#

4280.310Program requirements for MDOs.#

(a)Eligibility requirements for applicant MDOs. To be eligible for a direct loan or grant award under this subpart, an applicant must meet each of the criteria set forth in paragraphs (a)(1) through (4) of this section, as applicable.

(1)Type of applicant. The applicant must meet the definition of an MDO as provided in § 4280.302.

(2)Citizenship. Non-profit entities, to be eligible to apply for status as an MDO, must be at least 51 percent controlled by persons who are either:

(i)Citizens of the United States, the Republic of Palau, the Federated States of Micronesia, the Republic of the Marshall Islands, American Samoa, or the Commonwealth of Puerto Rico; or

(ii)Legally admitted permanent residents residing in the United States.

(3)Legal authority and responsibility. The applicant must have the legal authority necessary to carry out the purpose of the award.

(4)Other eligibility requirements. The applicant must also provide evidence that it:

(i)Has demonstrated experience in the management of a revolving loan fund; or

(ii)Certifies that it, or its employees, have received education and training from a qualified microenterprise development training entity so that the applicant has the capacity to manage such a revolving loan fund;

(iii)Is actively and successfully participating as an intermediary lender in good standing under similar loan programs; and

(iv)Provides an attorney's opinion regarding the potential microlender's legal status and its ability to enter into program transactions at the time of initial entry into the program. Subsequent to acceptance into the program, an attorney's opinion will not be required unless the Agency determines significant changes to the microlender have occurred.

(b)System for Awards Management. All applicants must be registered in the System for Awards Management (SAM) prior to submitting an application, unless determined exempt under 2 CFR 25.110. Loan and grant recipients must maintain an active SAM registration with current information at all times during which it has an active Federal award or an application under consideration by the Agency. The applicant must ensure that the information in the database is current, accurate, and complete. Applicants must ensure that they complete the Financial Assistance General Certifications and Representations in SAM.

(c)Minimum score. Once deemed eligible, an entity will be evaluated based on the scoring criteria in § 4280.316 for adequate qualification to participate in the program. Eligible MDOs must score a minimum of sixty (60) points in order to be considered to receive an award under this subpart.

(d)Ineligible applicants. An applicant will be considered ineligible if it:

(1)Does not meet the definition of an MDO as provided in § 4280.302;

(2)Is debarred, suspended or otherwise excluded from, or ineligible for, participation in Federal assistance programs; or

(3)Has an outstanding judgment against it, obtained by the United States in a Federal Court (other than U.S. Tax Court).

(e)Delinquencies. No applicant will be eligible to receive a loan if it is delinquent on a Federal debt.

(f)Application eligibility and qualification. An application will only be considered eligible for funding if it is submitted by an eligible MDO. The applicant will qualify for funding based on the results of review, scoring, and other procedures as indicated in this subpart, and the applicant will further:

(1)Establish an RMRF, or add capital to an RMRF originally capitalized under this program, and establish or continue a training and TA program for its microborrowers and prospective microborrowers; or

(2)Fund a TA-only grant program to provide services to rural microentrepreneurs and microenterprises.

(g)Business incubators. Because the purpose of a business incubator is to provide business-based TA and an environment in which micro-level, very small, and small businesses may thrive, a microlender that meets all other eligibility requirements and owns and operates a small business incubator will be considered eligible to apply. In addition, a business incubator selected to participate as a microlender may use RMAP funds to lend to an eligible microenterprise tenant, without creating a conflict of interest under § 4280.323(c).

4280.311Loan provisions for Agency loans to microlenders.#

(a)Purpose of the loan. Loans will be made to eligible and qualified microlenders to capitalize RMRFs that it will administer by making and servicing microloans in one or more rural areas.

(b)Eligible activities. Microlenders may make microloans for qualified business activities and use Agency loan funds only as provided in § 4280.322.

(c)Ineligible activities. Microlenders may not use RMRF funds for administrative costs or expenses and may not make microloans under this program for ineligible businesses or purposes as specified in § 4280.323.

(d)Cost share. The Federal share of the eligible project cost of a microborrower's project funded under this section shall not exceed 75 percent. The cost share requirement shall be met by the microlender using either of the options identified in paragraphs (d)(1) and (2) of this section in establishing an RMRF. A microlender may establish multiple RMRFs utilizing either option. Whichever option is selected for an RMRF, it must apply to the entire RMRF and all microloans made with funds from that RMRF.

(1)Microborrower project level option. The loan covenants between the Agency and the microlender and the microlender's lending policies and procedures shall limit the microlender's loan to the microborrower to no more than 75 percent of the eligible project costs and require that the microborrower obtain the remaining 25 percent of the eligible project cost from non-Federal sources. The non-Federal share of the eligible project cost of the project may be provided in cash (including through fees, grants, and gifts) or in the form of in-kind contributions.

(2)RMRF level option. The microlender shall capitalize the RMRF at no more than 75 percent Agency loan funds and not less than 25 percent non-Federal funds, thereby allowing the microlender to finance 100 percent of the microborrower's eligible project costs. All contributed funds shall be maintained in the RMRF.

(e)Loan terms and conditions for microlenders. Program loans will be made to microlenders under the following terms and conditions:

(1)Funds received from the Agency and any non-Federal share will be deposited into an account that will be the RMRF account and shall not be mingled with other MDO funds. The Agency will hold first lien position on the RMRF account, the LLRF account, and all notes receivable from microloans using Agency funds.

(2)The RMRF account will be used to make fixed-rate microloans, accept repayments from microborrowers and reimbursements from the LLRF, to repay the Agency loan and, with the advance written approval of the Agency, to supplement the LLRF with interest or fee earnings from the RMRF.

(3)The term of an Agency loan made to a microlender will be 20 years. If requested by the applicant MDO, a shorter term may be agreed upon by the microlender and the Agency. If a repayment workout is required after loan closing, the term of the loan may not exceed a 20-year period from the loan origination date.

(4)Each RMAP loan made to a microlender during its first five years of participation in the program will bear an interest rate of 2 percent for the life of the loan. After the fifth year of an MDO's continuous and satisfactory participation in the program, each new loan made to the microlender will bear interest at a rate of 1 percent. The interest rate on previous loans will remain unchanged. Satisfactory participation requires a loan default rate of 5 percent or less, a pattern of delinquencies of 10 percent or less in the MDO's RMRF account(s), and timely submission of reports to the Agency as required by § 4280.311(h).

(5)Each loan made to a microlender will automatically receive a 2-year deferral during which time no repayment to the Agency will be required. The deferral period will begin on the day the Agency's loan to the microlender is closed. During the initial 2-year deferral period, each loan to a microlender will accrue interest only on funds disbursed by the Agency. Interest accrued during the 2-year deferral period will be capitalized to the loan's principal balance during the 24th month of the loan unless the microlender chooses to make a voluntary payment of the accrued interest. The required monthly payments to amortize the loan after the 2-year deferral period will be based on the full loan amount plus capitalized interest, not just the amount disbursed to the microlender, even in cases where the Agency's loan has not been fully advanced to the microlender.

(6)Except in the case of liquidation or early repayment, loans to microlenders must fully amortize over the life of the loan. The first payment will be due to the Agency on the last day of the 24th month of the life of the loan.

(7)The microlender is responsible for full repayment of its loan to the Agency regardless of the performance of its microloan portfolio. Partial or full repayment of debt to the Agency under the program may be made at any time, including during the deferral period, without any pre-payment penalties being assessed.

(8)The Agency may call the entire loan due and payable prior to the end of the full term due to any non-performance, delinquency, or default on the loan.

(9)The loan closing between the microlender and the Agency should take place within 90 days from the execution of Form RD 1940-1, “Request for Obligation of Funds.” Microlenders that are unable to close the loan within 90 days of obligation must provide justification for the delay or loan funds will be forfeited through a de-obligation of funds.

(10)Microlenders will be eligible to receive a disbursement of up to 25 percent of the total loan amount at the time of loan closing. Funds disbursed at loan closing exceeding 25 percent of the loan amount will only be made if and to the extent that the MDO has made a funding commitment to an eligible microborrower that will be closed within 60 days from the Agency loan date. Interest will accrue on all funds disbursed to the microlender beginning on the date of disbursement.

(11)Microlenders may request in writing and receive additional loan disbursements until the full amount of the loan to the microlender is disbursed, or until the end of the 36th month of the loan, whichever occurs first. Letters of request for disbursement should be made not more often than quarterly and must be accompanied by a description of the microlender's anticipated need. Such description will indicate the amount and number of microloans anticipated to be made with the loan disbursement.

(12)Funds not disbursed to the microlender by the end of the 36th month of the loan from the Agency will be de-obligated and no longer available for disbursement to the MDO. In such cases where loan funds are deobligated, the Agency will establish a revised payment schedule to fully amortize the loan balance by its maturity date.

(13)In the event a microlender fails to meet its payment or reporting obligations to the Agency, the Agency may pursue any combination of the following:

(i)Take possession of the RMRF and/or any microloans outstanding, and/or the LLRF;

(ii)Call the loan due and payable in full; and/or

(iii)Enter into a workout agreement acceptable to the Agency, which may or may not include transfer or sale of the portfolio to another microlender (whether or not funded under the program) deemed acceptable to the Agency.

(14)If a microlender makes a withdrawal from the RMRF for any purpose other than to make a microloan, repay the Agency, or, with advance written approval, transfer an appropriate amount of non-Federal funds to the LLRF, the Agency may take actions including the restriction of further access to withdrawals from the account by the microlender or declaring the loan in default due to improper use of loan funds.

(f)Loan funding limitations—(1) Minimum and maximum loan amounts. The minimum loan amount that a microlender may borrow under this program will be $50,000. The maximum amount any microlender may borrow on a single loan under this program, or in any given Federal FY, will be $500,000. In no case will the aggregate outstanding balance owed to the program by any single microlender exceed $2,500,000.

(2)Use of funds. Agency loan funds must be used only to establish or recapitalize an existing Agency funded RMRF account out of which microloans will be made, into which microloan payments will be deposited, and from which repayments to the Agency will be made.

(g)Loan loss reserve fund (LLRF). Each microlender that receives one or more loans under the program will be required to establish an LLRF account.

(1)Purpose. The purpose of the LLRF is to protect the microlender and the Agency against losses that may occur as the result of the failure of one or more microborrowers to repay their loans on a timely basis.

(2)Capitalization and maintenance. The LLRF is subject to each of the following conditions:

(i)The microlender must maintain the LLRF at a minimum of 5 percent of the total amount owed by the microlender under the program to the Agency. If the LLRF falls below the required amount, the microlender will have 30 days to replenish the LLRF. The Agency will hold a security interest in the account and all funds therein until the MDO has repaid its debt to the Agency under this program.

(ii)No Agency loan funds may be used to capitalize the LLRF.

(iii)The LLRF must be held in a Federally insured deposit account separate and distinct from any other fund owned by the microlender.

(iv)The LLRF must remain open, appropriately capitalized, and active until such time as any loans owed to the Agency by the microlender under the program related to such LLRF are paid in full.

(3)Use of LLRF. The LLRF must be used only to:

(i)Recapitalize the RMRF in the event of the loss and write-off of a microloan;

(ii)Accept Non-Federal deposits as required for maintenance of the fund at a level equal to 5 percent or more of the amount owed to the Agency by the microlender under the program; and

(iii)Prepay or repay the Agency program loan.

(4)LLRF funded at time of closing. The LLRF account must be established by the microlender prior to the closing of the loan from the Agency. At the time of initial loan closing, sources of funding for the LLRF must be identified by the microlender and funds equal to 5 percent of the initial loan disbursement, if made at loan closing, must be made to the LLRF by the microlender. The amount in the LLRF can be built over time and must be maintained in an amount greater than or equal to 5 percent of the amount owed to the Agency by the microlender under the program. After the first disbursement is made to a microlender, further disbursements will only be made if the LLRF is funded at the appropriate amount. After the initial loan is made to a microlender, subsequent loan closings may require a deposit of additional funds to the LLRF to maintain an amount equal to 5 percent of the total loan balance owed to the Agency under the program. Federal funds, except where specifically permitted by other laws, may not be used to fund the LLRF.

(5)Additional LLRF funding. In the event of exhibited weaknesses, such as losses that are greater than 5 percent of the microloan portfolio or a microborrower delinquency rate in excess of 10 percent, the Agency may require the microlender to deposit additional funds into the LLRF; however, the Agency may never require an LLRF balance of more than 10 percent of the total amount owed to the Agency by the microlender.

(h)Recordkeeping, reporting, and oversight. Microlenders must maintain all records applicable to the program and make them available to the Agency upon request. Microlenders must submit quarterly reports as specified in paragraphs (h)(1) through (4) of this section. Portfolio reporting requirements must be met via the electronic reporting system. Other reports, such as narrative information, may be submitted as hard copy in the event the microlender or grantee does not have the capability to submit or accept such reports electronically.

(1)Periodic reports. On a quarterly basis, within 30 days of the end of each Federal FY calendar quarter, each microlender that has an outstanding loan under this section must provide to the Agency:

(i)An Agency-approved form containing such information as the Agency may require, and in accordance with OMB circulars and guidance, to ensure that funds provided are being used for the purposes for which the loan to the microlender was made;

(ii)Listing of each microborrower under this program, their loan balance and payment status; and

(i)The underlying loans have the same rates, terms and conditions, including the method of determining matching funds for a microborrower's project; and

(ii)The combined report allows the Agency to effectively administer the program, including providing the same level of transparency and information for each loan as if separate RMRF and LLRF reports had been prepared.

(4)Delinquency. In the event that a microlender has delinquent loans in its RMAP portfolio, quarterly reports will include narrative explanation of the steps being taken to cure the delinquency.

(5)Other reports. Other reports may be required by the Agency from time to time in the event of poor performance, one or more work-out agreements, or other such occurrences that require more than the usual set of program servicing.

(6)Access to microlender's records. Upon request by the Agency, the microlender will permit representatives of the Agency to inspect and make copies of any records pertaining to operation and administration of the program. Such inspection and copying may be made during regular office hours of the microlender or at any other time agreed upon between the microlender and the Agency.

(7)Changes in key personnel. Before any additions or changes are made to key personnel, the microlender must notify, and the Agency must approve, such changes. Such approval shall not be unreasonably withheld by the Agency.

(iii)A discussion reconciling the microlender's actual results for the period against its goals, milestones, and objectives as provided in the application package.

(2)Minimum retention. Microlenders must provide evidence in their quarterly reports that the sum of the unexpended amount in the RMRF, plus the amount in the LLRF, plus debt owed by the microborrowers is equal to a minimum of 105 percent of the amount owed by the microlender to the Agency, unless the Agency has established a higher LLRF reserve requirement for a specific microlender.

(3)Combining accounts and reports. If a microlender has more than one loan from the Agency, a separate report must be made for each loan except when RMRF accounts have been combined. A microlender may combine RMRF accounts only when the Agency approves the combining of accounts and reports in writing before such accounts are combined and reports are submitted, and:

4280.312Loan approval and closing.#

(a)Loan approval and obligating funds. The loan will be considered approved on the date the signed copy of Form RD 1940-1, “Request for Obligation of Funds,” is executed by the Agency. Form RD 1940-1 authorizes funds to be obligated and may be executed by the Agency after the microlender has signed the document, provided that the microlender has the legal authority to contract for a loan and to enter into required agreements, including an Agency-approved loan agreement, and meets all program loan requirements.

(b)Letter of conditions. Upon reviewing the conditions and requirements in the letter of conditions, the applicant must complete, sign, and return Form RD 1942-46, “Letter of Intent to Meet Conditions,” to the Agency; or if certain conditions cannot be met, the applicant may propose alternate conditions. The Agency will review any requests for changes to the letter of conditions and may approve only minor changes that do not materially affect the microlender and remain within the program requirements. Changes in legal entities prior to loan closing will not be approved.

(c)Loan closing. (1) Prior to loan closing, microlenders must provide evidence that the RMRF and LLRF bank accounts have been set up and the LLRF has been or will be funded as described in § 4280.311(g)(4). Such evidence shall consist of:

(i)A pre-authorized debit form allowing the Agency to withdraw payments from the RMRF account, and in the event of a repayment workout, from the LLRF account;

(ii)An Agency-approved automatic deposit authorization form, from the depository institution providing the Agency with the RMRF account number, into which funds may be deposited at time of disbursement to the microlender;

(i)All requirements of the letter of conditions have been met; and

(ii)There has been no material adverse change in the microlender, its key personnel, or its financial condition since the issuance of the letter of conditions. If one or more adverse changes have occurred, the microlender must explain the changes and the Agency must determine that the microlender remains eligible and qualified to participate as an MDO.

(3)The microlender will provide sufficient evidence that no lawsuits or other legal issues are pending or threatened that would adversely affect the security of the microlender when Agency security instruments are filed.

(iii)A statement from the depository institution as to the amount of cash in the LLRF account;

(iv)An Agency-approved promissory note and a loan agreement for each loan to the MDO must be executed at loan closing. The loan agreement will be prepared by the Agency using Form RD 4274-4, “Intermediary Relending Program/Rural Microentrepreneur Assistance Program Loan Agreement,” and reviewed by the MDO prior to loan closing; and

(v)An appropriate security agreement on the LLRF and RMRF accounts must be executed at loan closing.

(2)At loan closing, the microlender must certify that:

4280.313Grant provisions.#

Grants offered under this program will be made to eligible MDOs in such amounts and requirements for microlenders with a loan(s) from the Agency, and for MDOs that seek only a TA grant from the Agency. Competition for these funds will occur as a part of the application and qualification process of becoming a microlender or grant recipient. No entity will receive grant funding as both a microlender and a TA-only provider. RMAP microlenders are not eligible for TA-only grant funding and an MDO receiving TA-only grant funding is not eligible for microlender grant funding. Failure to meet scoring benchmarks will preclude an applicant from receiving loan and/or grant dollars. Once an MDO is participating as a microlender, TA grant funds will be made available annually based on the MDO's lending balances and the availability of funds.

(a)Microlender grants. The Agency shall make microlender TA grants to microlenders to assist them in providing marketing, management, and other TA to rural microentrepreneurs and microenterprises that have received or are seeking one or more microloans from the microlender. The capacity of a microlender to provide an integrated program of microlending and TA will be evaluated during the scoring process with their loan application and then annually in determining the amount of annual grant funds. An eligible MDO selected to be a microlender will be eligible to receive a microlending TA grant if it receives funding to provide microloans under this program. Microlender applicants for loan funding to establish or replenish a revolving loan fund originally capitalized under this program, may simultaneously apply for TA grant funds in an amount not to exceed 25 percent of the requested loan amount.

(1)Technical assistance grants to microlenders will be awarded annually on a non-competitive basis in an amount based on the MDO's outstanding loan balance as of June 30, subject to satisfactory program performance of the microlender and the availability of funds. Satisfactory performance includes the timely payment of program loan(s) and the submission of periodic reports to the Agency. Annual TA grants to a microlender, subject to the availability of funds, will be made in an amount to replenish the microlender's TA fund to an amount equal to 20 percent of the outstanding principal balance of loans made by the microlender to ultimate recipients unless otherwise published in an annual program funding notice. If available grant funds are not sufficient to fully replenish each microlender's TA funds to 20 percent of their outstanding loan balance, the available funds will be distributed proportionately based on the percentage of available funds to the total amount of annual TA grant funds requested.

(2)Any grant dollars obligated but not spent by the microlender from their initial or subsequent grants will be subtracted from the subsequent year's grant eligibility calculation to ensure that obligations cover only microloans made and active and that the MDO's total grant funds available for TA do not exceed the established 20 percent threshold.

(3)The microlender will agree to use TA grant funds exclusively for providing TA assistance and training to eligible microentrepreneurs and microenterprises, with the exception that up to 10 percent of the grant funds may be used to cover the microlender's administrative expenses. Grant funds may not be used to make loan payments.

(b)Technical assistance only grants. Grants will be competitively made to MDOs for the purpose of providing TA and training to prospective microborrowers. Technical assistance-only grants will be provided to eligible MDOs that seek to provide business-based TA and training to eligible microentrepreneurs and microenterprises, but do not seek funding as a microlender for an RMRF.

(1)The amount of a TA-only grant under this program will not exceed 10 percent of the amount of authorized appropriations available in any Federal FY for TA-only grants.

(2)Technical assistance only grants will have a grant term not to exceed 12 months from the date the grant agreement is signed.

(3)Technical assistance only grantees will be required to:

(i)Refer clients to internal or external non-program funded lenders for loans of $50,000 or less, and

(ii)Collect data regarding such clients. Technical assistance-only grantees will be considered successful if a minimum of 1-in-5 TA clients are referred for a microloan and are operating a business within 18 months of receiving TA from the MDO.

(c)Matching requirement. The MDO is required to provide a match of not less than 15 percent of the total amount of the grant in the form of matching funds, indirect costs, or in-kind goods or services. Unless specifically permitted by laws other than the statute authorizing RMAP, matching contributions must be made up of non-Federal funds.

(d)Administrative expenses. Not more than 10 percent of a grant received by an MDO for a Federal FY may be used to pay administrative expenses. Microlenders must annually submit a budget of proposed administrative expenses for Agency approval. The Agency has the right to deny the requested amount, even if it is at 10 percent or less, and to fund administrative expenses at a lower level.

(1)Administrative expenses should be kept to a minimum. As such, the applicant MDO is required in the application materials to provide an administrative budget plan indicating the amount of funding it will need for administrative purposes. Applicants will be scored accordingly, with those using less than 10 percent of the grant funds for administrative purposes being scored higher than those using 10 percent of the grant funds for administrative purposes.

(2)While operating the program, the selected grantee will be expected to adhere to the estimates it provides in its application and annual budget. If for any reason the MDO cannot meet those expectations, it must contact the Agency in writing with justification to request a budget adjustment. Budget adjustments will be considered only if the adjustment result for administrative expenses is within the 10 percent limitation.

(3)Microlenders that exceed 10 percent for administrative expenses will be considered in performance default and may be subject to Agency actions including the forfeiting of funds.

(e)Ineligible grant purposes. Grant funds, matching funds, indirect costs, and in-kind goods and services may not be used for:

(1)Grant application preparation costs;

(2)Costs incurred prior to the obligation date of the grant;

(3)Capital improvements;

(4)Political or lobbying activities;

(5)Assistance to any ineligible entity;

(6)Payment of any judgment or debt owed; or

(7)Payment of any loan.

(f)Facilitation of access to capital. Technical assistance-only grantees will be expected to provide training and TA services to the extent that access to capital for eligible microentrepreneurs and microenterprises is facilitated by referral to either an internal or external non-program loan fund so that these clients may take advantage of available financing programs.

(g)Grant agreement. For any grant to an MDO or microlender, the Agency will notify the approved applicant in writing, using an Agency-approved grant agreement, setting out the conditions under which the grant will be made. The form will include those matters necessary to ensure that the proposed grant is completed in accordance with the proposed project, that grant funds are expended for authorized purposes, and that the applicable requirements prescribed in the relevant Agency regulations are complied with.

4280.314[Reserved]#

4280.315MDO application and submission information.#

(a)Initial and subsequent applications. Applications shall be submitted in accordance with the provisions of this subpart unless adjusted by the Agency in an annual Federal Register document. The information required in §§ 4280.315 and 4280.316 is necessary for an application to be considered complete. Only those applicants that meet the basic eligibility requirements in § 4280.310 will have their applications fully scored and considered for participation in the program under this section. When preparing applications, applicants are strongly encouraged to review the application requirements and scoring criteria in § 4280.316 and provide documentation that will support a competitive score.

(b)Content and form of submission. All applicants must provide the information specified in paragraph (c) of this section. Additional application information is required in paragraph (d) of this section depending on the type of application being submitted.

(c)Application information for all applicants. All applicants must provide the following information and forms fully completed and with all attachments:

(1)Standard Form-424, “Application for Federal Assistance” for grants.

(2)Standard Form-424A, “Budget Information—Non-Construction Programs.”

(3)For entities applying for program loan funds to become an RMAP microlender only, Form RD 1910-11, “Certification of No Federal Debt.”

(4)Form RD 400-8, “Compliance Review” or sufficient demographic information for Agency completion of Form RD 400-8.

(5)Demonstration that the applicant is eligible to apply to participate in the program by submission of documentation as follows:

(i)If a nonprofit entity, evidence that the applicant organization meets the citizenship requirements and a copy of the applicant's bylaws and articles of incorporation, which include evidence that the applicant is legally considered a non-profit organization;

(ii)If an Indian tribe, evidence that the applicant is a federally recognized Indian tribe, and that the Indian tribe neither operates nor is currently served by an existing MDO;

(iii)If a public institution of higher education, evidence that the applicant is a public institution of higher education; and

(iv)For nonprofit applicants only, a Certificate of Good Standing, not more than six (6) months old, from the Office of the Secretary of State in the State, or tribal equivalent, in which the applicant is located. If the applicant has offices in more than one state, then the state in which the applicant is organized and licensed will be considered the home location.

(6)Certification by the applicant that it cannot obtain sufficient credit elsewhere to fund the activities called for under the program with similar rates and terms.

(d)Type of application specific information. In addition to the information required under paragraph (c) of this section, the following information is also required, as applicable:

(1)An applicant with more than 3 years of experience as an MDO outside of the program seeking to participate as an RMAP microlender must provide sufficient documentation to validate its years of experience.

(2)An applicant with 3 years or less experience as an MDO outside of the program seeking to participate as an RMAP microlender must provide the additional information specified in § 4280.316(c).

(3)An applicant seeking status as a microlender must identify in its application which cost-share option(s) the applicant will utilize, as described in § 4280.311(d), to meet the Federal cost-share requirement. If the applicant will utilize the RMRF-level option, the applicant shall identify the amount(s) and source(s) of the non-Federal share.

(4)An applicant seeking TA-only grant funds must provide the additional information specified in § 4280.316(d).

(e)Application limits. Microenterprise Development Organizations may only submit and have pending for consideration one application at any given time, which is for either microlender funds or TA-only funds.

(f)Completed applications. Applications that fulfill the requirements specified in paragraphs (a) through (e) of this section will be fully reviewed, scored, and ranked by the Agency in accordance with the provisions of § 4280.316.

4280.316Application scoring.#

Applications will be scored based on the criteria specified in this section using only the information submitted in the application. The total available points per application are 100 as shown in paragraphs (a) through (e) of this section. Awards will be based on the points ranking, with the highest scoring applications being funded first from the available funding.

(a)Application requirements for all applicants. All applicants must submit the eligibility and application information described in § 4280.315. The maximum points available in this part of the application are 45. In addition to the eligibility information, all applicants will submit:

(1)An organizational chart clearly showing the positions and naming the individuals in those positions. Of particular interest to the Agency are management positions and those positions essential to the operation of microlending and TA programming. Up to 5 points will be awarded based on the completeness of the organizational chart and management experience.

(2)Resumes for each of the individuals shown on the organizational chart and indicated as key to the operation of the activities to be funded under the program. There should be a corresponding resume for each of the key individuals noted and named on the organizational chart. Points will be awarded based on the quality of the resumes and on the ability of the key personnel to administer the program. Up to 5 points will be awarded.

(3)A succession plan to be followed in the event of the departure of personnel key to the operation of the applicant's RMAP activities. Up to 5 points will be awarded.

(4)Information indicating an understanding of microenterprise development concepts. Provide those parts of your policy and procedures manual that deal with the provision of loans, management of loan funds, and provision of TA. Up to 5 points will be awarded.

(5)The applicant's most recent, and two-year's previous, financial statements. Points will be awarded based on the demonstrated ability of the applicant to maintain or grow its fund balance, its ability to manage one or more federal programs, and its capacity to manage multiple funding sources, including restricted and non-restricted funding sources, income, earnings, and expenditures. Up to 10 points will be awarded.

(6)A copy of the applicant's organizational mission statement. The mission statement will be rated based on its relative connectivity to microenterprise development and general economic development and may or may not be a part of a larger statement. Up to 5 points will be awarded.

(7)Information regarding the geographic service area to be served, which must be rural as defined, and include the number of counties or other jurisdictions to be served. Note that the applicant will not be scored on the size of the service area, but on its ability to fully cover the service area as described. Up to 10 points will be awarded.

(b)Program loan application requirements for MDOs seeking to participate as RMAP microlenders with more than 3 years of experience. In addition to the information required under paragraph (a) of this section, applicants with more than three (3) years of experience as a microlender, including non-RMAP microloans, must also provide the information specified in paragraphs (b)(1) through (5) of this section. The total number of points available under this section (in addition to the up to 45 points available in paragraph (a) of this section) is 55.

(1)History of provision of microloans. The applicant must provide data regarding its history of making microloans for the three years previous to this application by answering the questions in paragraphs (b)(1)(i) through (v) of this section. This information should be provided clearly and concisely in numerical format as the data will be used to calculate points as noted. Up to a maximum of 20 points may be awarded under this criterion.

(i)Number and amount of microloans made during each of the three previous years.

(ii)Number and amount of microloans made in rural areas, as defined, in each of the three years prior to the year in which the application is submitted. If the history of providing microloans in rural areas shows at least one loan made in:

(A)Three or more consecutive years immediately prior to the application, 5 points will be awarded;

(B)At least two of the years but not more than the three consecutive years immediately prior to this application, 3 points will be awarded;

(C)At least 6 months, but not more than one year immediately prior to this application, 1 point will be awarded.

(iii)Calculate and enter the total number of microloans made in rural areas as a percentage of the total number of all microloans made for each of the past three years. If the percentage of the total number of microloans made in rural areas is:

(A)75 percent or more, 5 points will be awarded;

(B)At least 50 percent but less than 75 percent, 3 points will be awarded;

(C)At least 25 percent but less than 50 percent, 1 point will be awarded.

(iv)Enter the dollar amount of microloans made in rural areas as a percentage of the dollar amount of the total portfolio (rural and non-rural) of microloans made for each of the previous three years. If the percentage of the dollar amount of the microloans made in rural areas is:

(A)75 percent or more of the total amount, 5 points will be awarded;

(B)At least 50 percent but less than 75 percent, 3 points will be awarded;

(C)At least 25 percent but less than 50 percent, 1 point will be awarded.

(v)Each applicant shall compare the diversity of its entire microloan portfolio to the demographic makeup of its service area (as determined by the latest applicable decennial census for the state) based on the number of microloans made during the three years preceding the subject application. Demographic groups shall include gender, racial and ethnic minority status, and disability (as defined in the Americans with Disabilities Act). Points will be awarded on the basis of how close the MDO's microloan portfolio matches the demographic makeup of its service area. A maximum of 5 points will be awarded.

(A)If at least one loan has been made to each of the three demographic groups and if the percentage of loans made to each demographic group is 5 percent or less of their demographic makeup, 5 points will be awarded.

(B)If at least one loan has been made to each demographic group and if the percentage of loans made to each demographic group is each between 5 to 10 percent or less of the demographic makeup, 3 points will be awarded.

(C)If at least one loan has been made to each demographic group and if the percentage of loans made to one or more of the demographic groups is greater than 10 percent of the demographic makeup, 1 point will be awarded.

(D)If no loans have been made to two or more demographic groups, no points will be awarded.

(2)Portfolio management. The applicant's ability to manage its portfolio will be determined based on the data provided in response to paragraphs (b)(2)(i) and (ii) of this section and scored accordingly. The maximum number of points under this criterion is 10.

(i)Enter the total number of the applicant's microloans paying on time for the three previous years. If the total number of microloans paying on time at the end of each year over the prior three years is:

(A)95 percent or more, 5 points will be awarded;

(B)At least 85 percent but less than 95 percent, 3 points will be awarded;

(C)Less than 85 percent, 0 points will be awarded.

(ii)Enter the total number of microloans currently 30 to 90 days in arrears, or that have been written off over the three previous years. If the total number of these microloans is:

(A)5 percent or less of the total portfolio, 5 points will be awarded;

(B)More than 5 percent, 0 points will be awarded.

(3)History of provision of technical assistance. The Applicant's history of provision of TA to microentrepreneurs and microenterprises, and its ability to reach diverse communities, will be scored based on the data specified in paragraphs (b)(3)(i) through (iii) of this section. Applicants may use a chart to provide this information as they deem appropriate. The maximum number of points under this criterion is 15.

(i)Provide the total number of rural and non-rural microentrepreneurs and microenterprises that received both microloans and TA services for each of the previous three years. Of this total number, provide the percentage of rural microentrepreneurs and rural microenterprises that received both microloans and TA services for each of the previous three years. If the provision of both microloans and TA services to rural microentrepreneurs and rural microenterprises is demonstrated at a rate of:

(A)75 percent or more, 5 points will be awarded;

(B)At least 50 percent but less than 75 percent, 3 points will be awarded;

(C)At least 25 percent but less than 50 percent, 1 point will be awarded.

(ii)Provide the percentage of the total number of rural microentrepreneurs and rural microenterprises by racial and ethnic minority, disabled, and/or gender that received both microloans and TA services for each of the previous three years. If the demonstrated provision of microloans and TA services to these rural microentrepreneurs and rural microenterprises is at a rate of:

(A)75 percent or more, 5 points will be awarded;

(B)At least 50 percent but less than 75 percent, 3 points will be awarded;

(C)At least 25 percent but less than 50 percent, 1 point will be awarded.

(iii)Provide the ratio of TA clients that also received microloans, rounding to the nearest whole number, during each of the previous three years. If the ratio of clients receiving TA services to clients receiving microloans is:

(A)Between 1:1 and 1:5, 5 points will be awarded.

(B)Between 1:6 and 1:8, 3 points will be awarded.

(C)A ratio of either 1:9 or 1:10, 1 point will be awarded.

(4)Ability to provide technical assistance. In addition to providing a statistical history of their provision of TA to microentrepreneurs, microenterprises, and microborrowers, applicants must provide a narrative of not more than five pages describing the teaching and training methods used by the applicant organization to provide such TA and discussing the outcomes of their endeavors. Technical assistance is defined in § 4280.302. The narrative will be scored as specified in paragraphs (b)(4)(i) through (iii) of this section. Points may be awarded for each of the categories. The maximum number of points under this criterion is 5.

(i)Applicants that have used more than one method of training and TA (e.g., classroom training, peer-to-peer discussion groups, individual assistance, distance learning) will be awarded 2 points.

(ii)Applicants that provide success stories to demonstrate the effects of TA on their clients will be awarded 2 points.

(iii)Applicants that provide evidence that they require evaluations by the clients of their training programs and indicate that the average level of evaluation scores is “good” or higher will be awarded 1 point.

(5)Proposed administrative expenses to be spent from TA grant funds. The maximum number of points under this criterion is 5. If the percentage of grant funds to be used for administrative purposes is:

(i)Less than 5 percent of the TA grant funds, 5 points will be awarded;

(ii)Equal to 5 percent but less than 8 percent, 3 points will be awarded;

(iii)Equal to 8 percent or greater, 0 points will be awarded.

(c)Application requirements for MDOs seeking to participate as RMAP microlenders with 3 years or less experience. In addition to the information required under paragraph (a) of this section, an applicant MDO with 3 years or less experience that is applying to be a microlender must submit the information specified in paragraphs (c)(1) through (8) of this section. The total number of points available under this paragraph, in addition to the maximum of 45 points available in paragraph (a) of this section, is 55, for a total of 100.

(1)The applicant must provide a narrative work plan that clearly indicates its intention for the use of loan and grant funds. Provide goals and milestones for planned microlending and TA activities. In relation to the information requested in paragraph (a) of this section, the applicant must describe how it will incorporate its mission statement, utilize its employees, and maximize its human and capital assets to meet the goals of this program. The applicant must provide its strategic plan and organizational development goals and clearly indicate its lending goals for the five years after the date of application. The narrative work plan should be not more than five pages in length. Up to a maximum of 10 points will be awarded.

(2)The applicant will provide the date that it began business as an MDO or other provider of business education and/or facilitator of capital. This date will reflect when the applicant became licensed to do business by the Secretary of State, or tribal equivalent, in which it is registered and engaged regularly paid staff to conduct business on a daily basis. If the applicant has been in business for:

(i)More than 2 years but less than 3 years, 5 points will be awarded;

(ii)At least 1 year, but not more than 2 years, 3 points will be awarded;

(iii)At least 6 months, but not more than 1 year, 1 point will be awarded;

(iv)Less than 6 months, or more than 3 full years, 0 points will be awarded. (If more than 3 full years, the applicant must apply under the provisions for MDOs with more than 3 years of experience as specified in paragraph (b) of this section.)

(3)The applicant must describe in detail any microenterprise development training received by it as a whole, or its employees as individuals, to date. The narrative may refer reviewers to already submitted resumes to save space. The training received will be rated on its topical variety, the quality of the description, and its relevance to the organization's strategic plan. The applicant should not submit training brochures or conference announcements. Up to a maximum of 10 points will be awarded.

(4)The applicant must indicate its current number of employees, those that concentrate on rural microentrepreneurial development, and the current average caseload for each. Indicate how the caseload ratio does or does not optimize the applicant's ability to perform the services described in the work plan. Discuss how Agency grant funds will be used to assist with TA program delivery and how funding of the program loan application will affect the portfolio. Up to 5 points will be awarded.

(5)Applicants may submit a maximum of five (5) letters of support with one point awarded for each letter. Support letters should be signed and dated and come from potential beneficiaries and other local organizations. Letters received from Congressional members and technical assistance providers will not be included in the count of support letters received. Additionally, identical form letters signed by multiple potential beneficiaries and/or local organizations will not be included in the count of support letters received. The applicant must indicate any training organizations with which it has a working relationship. Provide contact information for references regarding the applicant's capacity to perform the work in the plan provided. Up to a maximum of five (5) points will be awarded.

(6)Describe any plans for continuing training relationship(s), including ongoing or future training plans and goals, and the timeline for the same. Up to 5 points will be awarded.

(7)The applicant will describe its internal benchmarking system for determining client success, reporting on client success, and following client success for up to 5 years after completion of a training relationship. Up to 10 points will be awarded.

(8)The applicant will identify its proposed administrative expenses to be spent from TA grant funds. The maximum total number of points under this criterion is 5. If the percentage of grant funds to be used for administrative purposes is:

(i)Less than or equal to 5 percent of the TA grant funds, 5 points will be awarded;

(ii)More than 5 percent but less than 8 percent, 3 points will be awarded;

(iii)Equal to 8 percent or greater, 0 points will be awarded.

(d)Application requirements for MDOs seeking TA-only grants. Technical assistance-only grants may be provided to MDOs that are not RMAP microlenders seeking to provide training and technical assistance to rural microentrepreneurs and rural microenterprises. An applicant seeking a TA-only grant must submit the information specified in paragraphs (d)(1) through (4) of this section. The total number of points available under this section, in addition to the 45 points available in paragraph (a) of this section, is 55, for a total of 100 points.

(1)History of provision of TA. Each applicant's history of provision of TA to microentrepreneurs and microenterprises, and its ability to reach diverse communities, will be scored based on the data specified in paragraphs (d)(1)(i) through (iii) of this section. The maximum number of points under this criterion is 20.

(i)Provide the total number of rural and non-rural microentrepreneurs and microenterprises that received both TA services and resultant microloans for each of the previous three years. Of this total number, provide the percentage of rural microentrepreneurs and rural microenterprises that received both TA services and resultant microloans for each of the previous three years. If the provision of both TA services and resultant microloans to rural microentrepreneurs and rural microenterprises is demonstrated at a rate of:

(A)75 percent or more, 5 points will be awarded;

(B)At least 50 percent but less than 75 percent, 3 points will be awarded;

(C)At least 25 percent but less than 50 percent, 1 point will be awarded.

(ii)Provide the percentage of the total number of rural microentrepreneurs by racial and ethnic minority, disabled, and/or gender that received both microloans and TA services for each of the previous three years. If the demonstrated provision of TA and resultant microloans to these rural microentrepreneurs when compared to the total number of microentrepreneurs assisted, is at a rate of:

(A)75 percent or more, 10 points will be awarded;

(B)At least 50 percent but less than 75 percent, 7 points will be awarded;

(C)At least 25 percent but less than 50 percent, 5 points will be awarded.

(iii)Provide the ratio of TA clients that also received microloans during each of the last three years, rounded to the nearest whole number. If the ratio of clients receiving TA to clients receiving microloans is:

(A)Between 1:1 and 1:5, 5 points will be awarded.

(B)Between 1:6 and 1:8, 3 points will be awarded.

(C)Either 1:9 or 1:10, 1 point will be awarded.

(2)Ability to provide TA. In addition to providing a statistical history of their provision of TA to microentrepreneurs, microenterprises, and microborrowers, applicants must provide a narrative of not more than five pages describing the teaching and training method(s) used by the applicant organization to provide TA and discussing the outcomes of their endeavors. The narrative will be scored as specified in paragraphs (d)(2)(i) through (iv) of this section. The maximum number of points under this criterion is 20.

(i)Applicants that have used more than one method of training and TA (e.g., classroom training, peer-to-peer discussion groups, individual assistance, and distance learning) will be awarded 5 points.

(ii)Applicants that provide success stories to demonstrate the effects of TA on their clients will be awarded points under either of the following paragraphs, but not both:

(A)News stories that highlight businesses made successful as a result of the applicant's TA; 5 points will be awarded.

(B)Internal stories that highlight businesses made successful as a result of TA, 3 points.

(iii)Applicants that provide evidence that they require evaluations by the clients of their training programs will be awarded 3 points. Applicants will provide the total number of evaluations received and the average score from the evaluations received. An additional two points will be awarded if the total evaluation scores are above an average of 3.0 on a five-point scale, with points determined by the client ratings on a declining scale as follows:

(A)Extremely Satisfied, 5 points.

(B)Satisfied, 4 points.

(C)Average, 3 points.

(D)Dissatisfied, 2 points.

(E)Very Unsatisfied, 1 point.

(iv)Applicants that present well-written narrative information regarding their programs and services to be delivered and their outreach efforts within the service area that is clearly and concisely written and is five pages or less will be awarded up to a maximum of 5 points.

(3)Technical assistance plan. Submit a concise plan for the provision of TA explaining how the funds will benefit the current program and how it will allow the applicant to expand its non-program microlending activities. Up to 10 points will be awarded.

(4)Proposed administrative expenses to be spent from TA grant funds. The maximum number of points under this criterion is 5. If the percentage of grant funds to be used for administrative purposes is:

(i)Less than or equal to 5 percent of the TA grant funds, 5 points will be awarded;

(ii)More than 5 percent but less than 8 percent, 3 points will be awarded;

(iii)Equal to 8 percent or greater, 0 points will be awarded.

(e)Re-application requirements for participating microlenders with more than 5 years of experience as a microlender under this program. (1) Microlender applicants with more than 5 years of experience as an MDO under this program may choose to submit a shortened loan/grant application that includes the following:

(i)A letter of request for funding stating the amount of loan and/or grant funds being requested;

(ii)An indication of the loan and/or grant amounts being requested accompanied by a completed Form SF 424 and any pertinent attachments;

(i)A loan default rate of 5 percent or less;

(ii)A pattern of delinquencies during the period of participation in this program of 10 percent or less;

(iii)A pattern of use of TA dollars that indicates at least one in ten TA clients receive a microloan;

(iv)A statement discussing the need for more funding, accompanied by account documentation showing the amounts in each of the RMRF and LLRF accounts established to date; and

(2)The Agency, using this request and data available in the reports submitted under previous funding(s), will review the overall program performance of the applicant over the life of its participation in the program to determine its continued qualification for subsequent funds. Requirements include:

(v)A pattern of compliance with program reporting requirements.

(3)Shortened applications under this section will be rated on a pass or fail basis. Passing applications will be assigned a score of 90 points and will be ranked accordingly in the quarterly competitions. Failing applications under this section will be scored 0 and experienced MDOs may be required to complete the application requirements of paragraph (b) of this section.

4280.317Selection of applications for funding.#

All eligible applications received will be scored using the scoring criteria specified in § 4280.316 and funded in descending order from the highest total score to applications receiving 60 points, subject to the authorization of appropriations for the Federal FY. If two or more applications have the same score and available funds cannot fund the individual projects, the Administrator may prioritize such applications to help the program achieve overall geographic diversity.

(a)Timing and submission of applications. (1) All applications must be submitted as a complete application in one package of materials. Packages must be in the order of appearance in § 4280.315. Applications that are disorganized or otherwise not ready for evaluation will be returned to the applicant and not considered for funding.

(2)Applications will be accepted on a continuing basis at any Rural Development State Office and will compete nationally for available funds on a quarterly basis using Federal fiscal quarters.

(3)Applications received will be reviewed, scored, and ranked quarterly. Unless withdrawn by the applicant, the Agency will retain unsuccessful applications that score 60 points or more for consideration in subsequent reviews, through a total of four quarterly reviews. Applications unsuccessful after competing for funds in four quarters will be returned to the applicant.

(b)Availability of funds. If an Application is received, scored, and ranked, but insufficient funds remain to fully fund the project, the Agency may elect to fund an Application requesting a smaller amount that has a lower score. Before this occurs, the Agency, as applicable, will provide the higher scoring applicant the opportunity to reduce the amount of its request to the amount of funds available. If the applicant agrees to lower its request, it must certify that the purposes of the project can be met, and the project is financially feasible at the lower amount.

(c)Applicant notification. The Agency will notify applicants regarding their selection or non-selection, provide appeal rights of unsuccessful applicants, and provide closing procedures for the loan and/or grant awardees.

(d)Closing. Awardees unable to complete closing for an approved obligation within 90 days or an extended date approved by the Agency will forfeit their funding award in accordance with § 4280.311(e)(9).

4280.318-4280.319-4280.319 [Reserved]#

4280.320Grant administration.#

(a)Oversight. Any MDO receiving a grant under this program is subject to Agency oversight, with site visits and inspection of records occurring at the discretion of the Agency. In addition, MDOs receiving a grant under this subpart must submit reports, as specified in paragraphs (a)(1) through (3) of this section.

(1)On a quarterly basis, within 30 days after the end of each Federal fiscal quarter, the microlender will provide to the Agency an Agency-approved quarterly report containing such information as the Agency may require to ensure that funds provided are being used for the purposes for which the grant was made, including:

(i)Narrative reporting information as required by Office of Management and Budget (OMB) circulars and successor regulations. This narrative will include information on the MDO's TA, training, and/or enhancement activity, and grant expenses, milestones met, or unmet, explanation of difficulties, observations and other such information;

(ii)If requesting grant funds at the time of reporting, an executed SF-270 form and a brief description of the proposed activity-based expenditures are required.

(2)If a microlender has more than one grant from the Agency, a separate report must be made for each grant.

(3)Other reports may be required by the Agency from time to time in the event of poor performance or other such occurrences that require more than the usual set of reporting information.

(b)Payments. The Agency will make grant payments not more often than quarterly. The first grant payment may be made in advance and will equal no more than one fourth of the grant award. Other payment requests must be submitted on Standard Form 270 and will only be paid if the MDO's reports are up to date and approved.

4280.321Grant and loan servicing.#

In addition to the ongoing oversight of the participating MDOs, all grants will be serviced in accordance with applicable regulations, including 7 CFR part 1951, subparts E and O, 7 CFR part 3, and the Office of Management and Budget (OMB) regulations including, but not limited to, 2 CFR parts 200, 215, 220, 230, and OMB Circulars A-110 and A-133. Loans to microlenders will be serviced in accordance with 7 CFR part 1951, subparts E, O, and R, and OMB Circular A-129.

4280.322Loans from the microlenders to microentrepreneurs.#

The primary purpose of making a program loan to a microlender is to enable that microlender to make microloans to rural microenterprises and microentrepreneurs. It is the responsibility of each microlender to make microloans in such a fashion that the terms and conditions of the microloan will support microborrower success while enabling the microlender to repay its loan from the Agency. It is the responsibility of each microborrower to repay the microlender in accordance with the terms and conditions agreed to with the microlender. The microlender is responsible for full repayment to the Agency of its loan regardless of the performance of its microloan portfolio.

(a)Maximum microloan amount. The maximum amount of a microloan made under this program will be $50,000. The total outstanding balance of microloans to any microborrower may not exceed $50,000.

(b)Microloan terms and conditions. The terms and conditions for microloans made by microlenders will be negotiated between the prospective microborrower and the microlender, with the following limitations:

(1)No microloan may have a term of more than 10 years;

(2)The interest rate charged to the microborrower will be established at or before the microloan closing and at such a rate that the microloan is affordable to the microborrower and provides a reasonable margin of earnings to the microlender.

(c)Microloan insurance requirements. The microlender has full discretion to require reasonable hazard, key person, and other insurance coverage from the microborrower as part of the loan transaction.

(d)Credit elsewhere test. Microborrowers will be subject to a “credit elsewhere” test so that the microlender will make loans only to those borrowers that cannot obtain business funding of $50,000 or less at affordable rates and on acceptable repayment terms. Each microborrower file must contain evidence that the microborrower has sought credit elsewhere or that the rates and terms available within the community at the time were outside the range of the microborrower's affordability. Evidence may include a comparison of rates, loan limitations, terms, or other requirements from other funding sources. Denial letters from other lenders are not required.

(e)Fair credit requirements. To ensure fairness, microlenders must publicize their rates and terms on a regular basis. Microlenders are also subject to Fair Credit lending practices and Federal nondiscrimination requirements as stated in § 4280.305.

(f)Eligible microloan purposes. Agency loan funds may be used to make microloans as defined in § 4280.302 for any legal business purpose not identified in § 4280.323 as an ineligible purpose. Microlenders may make microloans for qualified business activities and expenses including, but not limited to:

(1)Working capital;

(2)The purchase of furniture, fixtures, supplies, inventory or equipment;

(3)Debt refinancing;

(4)Business acquisitions; and

(5)The purchase or lease of real estate that is already improved and will be used for the location of the subject business only, provided no demolition or construction will be accomplished with program funds. Neither interior decorating, nor the affixing of chattel to walls, floors, or ceilings are considered to be demolition or construction.

(g)Military personnel. Military personnel who are or seek to be a microentrepreneur and are on active duty with six months or less remaining in their active duty status may receive a microloan and/or TA and training if they are otherwise qualified to participate in the program.

4280.323Ineligible microloan purposes and uses.#

Agency loan funds will not be used for the payment of microlender administrative costs or expenses and microlenders may not make microloans under the program for any of the purposes and uses identified as ineligible in paragraphs (a) through (n) of this section.

(a)Construction costs including property demolition, renovation, elimination of walls, or property additions.

(b)The financing of timeshares, apartments, duplexes, or other residential housing.

(c)Assistance that will cause a conflict of interest or the appearance of a conflict of interest including but not limited to:

(1)Financial assistance to principals, directors, officers, or employees of the microlender, or their close relatives, as defined; or

(2)Financial assistance to any entity which would appear to benefit the microlender or its principals, directors, or employees, or their close relatives, as defined, in any way other than the normal repayment of debt.

(d)Distribution or payment to a microborrower when such will use any portion of the microloan for other than business purposes.

(e)Microloans to a charitable institution not gaining sufficient revenue from business sales or services to support the operation and repay the microloan.

(f)Microloans to a fraternal organization.

(g)Any microloan to an applicant that has an RMAP-funded microloan application pending with another microlender or that has an RMAP-funded microloan outstanding with another microlender that would cause the applicant to owe a combined amount of more than $50,000 to one or more microlenders under the program.

(h)Assistance to USDA Rural Development employees, or their close relatives, as defined.

(i)Microloans for any illegal activity.

(j)Any project that is in violation of either a Federal, State, or local environmental protection law, regulation, or enforceable land use restriction unless the microloan will result in curing or removing the violation.

(k)Loans supporting explicitly religious activities, such as worship, religious instruction or proselytization.

(l)Golf courses, race tracks, or gambling facilities.

(m)Funding of any political or lobbying activities.

(n)Lines of credit.

4280.324-4280.399-4280.399 [Reserved]#

4280.400OMB control number.#

The information collection requirements contained in this subpart have been approved by the Office of Management and Budget (OMB) and have been assigned OMB control number 0570-0062. A person is not required to respond to this collection of information unless it displays a currently valid OMB control number.

Subpart E · Subpart E—Rural Business Development Grants

4280.401Purpose.#

This subpart implements the RBDG program administered by the Agency. Grants made under this subpart will be made to eligible entities for use in funding various business opportunity and business enterprise Projects that serve Rural Areas.

4280.402[Reserved]#

4280.403Definitions.#

Administrator. The Administrator of RBS or designees or successors. Agency. Rural Business-Cooperative Service (RBS) or successor. Agriculture Production. The cultivation, production, growing, raising, feeding, housing, breeding, hatching, or managing of crops, plants, animals or birds, either for fiber, food for human consumption, or livestock feed. Arm's-length Transaction. The sale, release, or disposition of assets in which the title to the property passes to a ready, willing, and able disinterested third party that is not affiliated with or related to and has no security, monetary, or stockholder interest in the grantee or transferor at the time of the transaction. Business Support Centers. Centers established to provide assistance to businesses in such areas as counseling, business planning, training, management assistance, marketing information, and locating financing for business operations. The centers need not be located in a Rural Area, but must provide assistance to businesses located in Rural Areas. Conflict of Interest. When the grantee's employees, Board of Directors, or their immediate families have a legal or personal financial interest in the recipient(s) receiving the benefits or services of the grant. Tribal Governments, subdivisions of Tribal Governments (chapters, districts, authorities, townships, etc.), and Tribal arms and instrumentalities, entities wholly-owned and chartered by Tribal Governments including but not limited to: Tribal owned corporations (including Section 17 Corporations, Community Development Corporations and Economic Development Corporations), Tribal owned businesses, Tribal owned authorities, Tribal owned utilities, other Tribally owned enterprises and their subsidiaries will not be considered as having a conflict of interest due to their, or their Board's, ties to their associated Tribe or each other. Departmental Grant Regulations. The USDA grant regulations at 2 CFR chapter IV. Economic Development. The industrial, business and financial augmentation of an area as evidenced by increases in total income, employment opportunities, value of production, duration of employment, or diversification of industry, reduced outmigration, higher labor force participation rates or wage levels or gains in other measurements of economic activity, such as land values. Indian Tribe (Tribal), Tribal Government and/or Federally Recognized Tribes. Any Indian or Alaska Native tribe, band, nation, pueblo, village or community as defined by the Federally Recognized Indian Tribe List Act (List Act) of 1994 (Pub. L. 103-454). Industrial Site. The development of undeveloped real estate for uses which will assist Small and Emerging Businesses. Long-term. The period of time covered by the three most recent decennial censuses of the United States to the present. Nonprofit. An entity chartered as a nonprofit organization under applicable State or Tribal law. Other Business Development. Any business related activity that will assist Small and Emerging Businesses and may include but is not limited to business incubators, business training centers, and other training activity which leads directly to Small and Emerging Business development. Planning. A process to coordinate Economic Development activities, develop guides for action, or otherwise assist local community leaders in the Economic Development of Rural Areas. Priority Communities. Communities targeted for Agency assistance as determined by the U.S. Department of Agriculture Under Secretary for Rural Development that are experiencing trauma due to natural disasters or are undertaking or completing fundamental structural changes, have remained persistently poor, or have experienced Long-Term population decline or job deterioration. Project. The result of the use of grant funds provided under this subpart through Technical Assistance or Planning relating to the Economic Development of a Rural Area; or the result of the use of program funds (i.e., a facility whether constructed by the applicant or a third party made with grant funds, Technical Assistance, startup operating costs, or working capital). A revolving fund established in whole or in part with grant funds will also be considered a Project. Public Bodies/Government Entity. Public Bodies include States, counties, cities, townships, and incorporated towns and villages, boroughs, authorities, districts, and education institutions organized under State and Federal laws, and Indian Tribes. Rural and Rural Area. As described in 7 U.S.C. 1991(a)(13)(A) and (D) et seq. Small and Emerging Business. Any private and/or nonprofit business which will employ 50 or fewer new employees and has less than $1 million in gross revenue; for retail operations, gross revenue may be reduced by cost of goods sold and returns or for a service organization, gross revenue may be reduced by the cost of providing service or for a manufacturing operation, gross revenue may be reduced by the cost of raw materials and the cost of production. The $1 million gross revenue and 50 or fewer new employee thresholds apply only to each individual Tribal owned enterprise applicant or recipient. Due to the unique structuring of Tribal economic development, the revenue or employees of the Tribe and/or parent Tribal enterprise will not apply towards the individual Tribal enterprise applicant or recipient, regardless of shared ownership or Directors. The revenue of Tribes, subdivisions of Tribes and Tribal entity applicants, will not be considered revenue in determining program and project eligibility. State. Any of the 50 States, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, the Republic of Palau, the Federated States of Micronesia, and the Republic of the Marshall Islands. Technical Assistance. A function performed for the benefit of a private business enterprise or a community and which is a problem solving activity, such as market research, product and/or service improvement, feasibility study, etc., to assist in the Economic Development of a Rural Area.

4280.404Exception authority.#

The Administrator may make an exception, on a case-by-case basis, to any requirement or provision of this subpart that is not inconsistent with any authorizing statute or applicable law if the Administrator determines that application of the requirement or provision would adversely affect the Government's financial interest.

4280.405Review or appeal rights.#

A person may seek a review of an Agency decision under this subpart from the appropriate Agency official that oversees the program in question or appeal to the National Appeals Division in accordance with 7 CFR part 11.

4280.406Conflict of interest.#

(a)General. No conflict of interest or appearance of conflict of interest will be allowed. For purposes of this subpart, Conflict of Interest includes, but is not limited to, distribution or payment of grant, guaranteed loan funds, and matching funds or award of Project construction contracts to an individual owner, partner, or stockholder, or to a beneficiary or immediate family of the applicant or grantee when the recipient will retain any portion of ownership in the applicant's or grantee's Project. Grant and matching funds may not be used to support costs for services or goods going to, or coming from, a person or entity with a real or apparent conflict of interest. All transactions must be Arm's-length Transactions.

(b)Assistance to employees, relatives, and associates. The Agency will process any requests for assistance under this subpart in accordance with 7 CFR part 1900, subpart D.

(c)Member/delegate clause. No member of or delegate to Congress shall receive any share or part of this grant or any benefit that may arise therefrom; but this provision shall not be construed to bar, as a contractor under the grant, a publicly held corporation whose ownership might include a member of Congress so long as the member's ownership is less than 10 percent.

4280.407Statute and regulation references.#

All references to statutes and regulations are to include any and all successor statutes and regulations.

4280.408U.S. Department of Agriculture departmental regulations and laws that contain other compliance requirements.#

(a)Departmental regulations. All funded under this subpart are subject to the provisions of the Departmental Regulations, as applicable, which are incorporated by reference herein.

(b)Equal opportunity and nondiscrimination. The Agency will ensure that equal opportunity and nondiscrimination requirements are met in accordance with the Equal Credit Opportunity Act, 15 U.S.C. 1691 et seq. and 7 CFR part 15d, “Nondiscrimination in Programs and Activities Conducted by the United State Department of Agriculture.” The Agency will not discriminate against applicants on the basis of race, color, religion, national origin, sex, marital status, or age (provided that the applicant has the capacity to contract); because all or part of the applicant's income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act, 15 U.S.C. 1601 et seq.

(c)Civil rights compliance. Recipients of grants must comply with the Americans with Disabilities Act of 1990, 42 U.S.C. 12101 et seq., Title VI of the Civil Rights Act of 1964, 42 U.S.C. 2000d et seq., and section 504 of the Rehabilitation Act of 1973, 29 U.S.C. 794. This may include collection and maintenance of data on the race, sex, and national origin of the recipient's membership/ownership and employees. The data must be available to conduct compliance reviews.

(1)Initial compliance reviews will be conducted by the Agency prior to funds being obligated.

(2)Grants will require one subsequent compliance review following Project completion. This will occur prior to the last disbursement of grant funds.

(d)Environmental requirements. Actions taken under this subpart must comply with 7 CFR part 1970. Prospective applicants are advised to contact the Agency to determine environmental requirements as soon as practicable after they decide to pursue any form of financial assistance directly or indirectly available through the Agency.

(1)Any required environmental review must be completed by the Agency prior to the Agency obligating any funds.

(2)The applicant will be notified of all specific compliance requirements, including, but not limited to, the publication of public notices, and consultation with State Historic Preservation Offices (or Tribal Historic Preservation Offices where appropriate) and the U.S. Fish and Wildlife Service.

(3)A site visit by the Agency may be scheduled, if necessary, to determine the scope of the review.

(4)Applications for Technical Assistance or Planning Projects are generally excluded from the environmental review process by 7 CFR 1970.53 provided the assistance is not related to the development of a specific site. However, as further specified in 7 CFR 1970.53, the grantee for a Technical Assistance grant, in the process of providing Technical Assistance, must consider the potential environmental impacts of the recommendations provided to the recipient of the Technical Assistance as requested by the Agency and in accordance with 7 CFR part 1970.

(5)Applicants for grant funds must consider and document within their plans the important environmental factors within the Planning area and the potential environmental impacts of the plan on the Planning area, as well as the alternative Planning strategies that were reviewed.

(6)Whenever an applicant files an application that includes a direct construction Project and a plan, they must have a separate environmental evaluation.

(e)Discrimination complaints—(1) Who may file. Persons or a specific class of persons believing they have been subjected to discrimination prohibited by this section may file a complaint personally, or by an authorized representative with USDA, Director, Office of Adjudication, 1400 Independence Avenue SW., Washington, DC 20250.

(2)Time for filing. A complaint must be filed no later than 180 days from the date of the alleged discrimination, unless the time for filing is extended by the designated officials of USDA or the Agency.

(f)Uniform Relocation and Real Property Acquisition Policies Act. All Projects must comply with the requirements set forth in 7 CFR part 21.

(g)Floodplains and wetlands. All Projects must comply with Executive Order 11988 “Floodplain Management” and Executive Order 11990 “Protection of Wetlands.” The applicable regulations are codified at 44 CFR parts 59 through 80.

4280.409[Reserved]#

4280.410Other laws and regulations that contain compliance requirements for this program.#

(a)Equal employment opportunity. For all construction contracts and grants in excess of $10,000, the contractor must comply with Executive Order 11246, as amended by Executive Order 11375, and as supplemented by applicable Department of Labor regulations (41 CFR part 60-1). The applicant is responsible for ensuring that the contractor complies with these requirements.

(b)Architectural barriers. All facilities financed with Zero-Interest Loans that are open to the public or in which persons may be employed or reside must be designed, constructed, or altered to be readily accessible to and usable by disabled persons. Standards for these facilities must comply with the Architectural Barriers Act of 1968, as amended, (42 U.S.C. 4151-4157).

(c)Uniform relocation assistance. Relocations in connection with these programs are subject to 49 CFR part 24 as referenced by 7 CFR part 21 except that the provisions in title III of the Uniform Act do not apply to these programs.

(d)Drug-free workplace. Grants made under these programs are subject to the requirements contained in 2 CFR chapter IV which implements the Drug-Free Workplace Act. RBDG recipients will be required to certify that it will establish and make a good faith effort to maintain a drug-free workplace program.

(e)Debarment and suspension. The requirements of 2 CFR chapter IV are applicable to this program.

(f)Intergovernmental review of Federal programs. These programs are subject to the requirements of Executive Order 12372 and 2 CFR chapter IV. Proposed Projects are subject to the State and local government review process contained in 2 CFR chapter IV.

(g)Restrictions on lobbying. The restrictions and requirements imposed by 31 U.S.C. 1352, and 2 CFR chapter IV, are applicable to these programs.

(h)Earthquake hazards. These programs are subject to the seismic requirements of the Earthquake Hazards Reduction Act of 1977 (42 U.S.C. 7701-7706).

(i)Affirmative fair housing. If applicable, the grantee will be required to comply with the Affirmative Fair Housing Act (42 U.S.C. 3601-3631 and 24 CFR part 100).

(j)Flood hazard insurance. The RBDG program is subject to the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973, as amended by 42 U.S.C. 4001-4129 and 7 CFR part 1806, subpart B.

(k)Uniform administrative requirements, cost principles, and audit requirements for Federal awards. The requirements of 2 CFR chapter IV, or its successor regulations are applicable to this program.

(l)Planning and performing construction and other development. The requirements of 7 CFR part 1924, subpart A, or its successor regulations, are applicable to this program.

(m)Transparency Act. The requirements of 2 CFR part 170 are applicable to this program.

4280.411Forms, guides, and attachments.#

All forms, guides, and attachments referenced in this subpart are available online at: http://forms.sc.egov.usda.gov/eForms/ or in any Rural Development State office.

4280.412-4280.414-4280.414 [Reserved]#

4280.415Rural Business Development Grants.#

Sections 4280.416 through 4280.439 identify the provisions that the Agency will use for making awards for Rural Business Development Grants.

4280.416Applicant eligibility.#

To receive an RBDG under this subpart, an applicant must meet the requirements specified in paragraphs (a) through (e) of this section. If an award is made to an applicant, that applicant (grantee) must continue to meet the requirements specified in this section. If the grantee does not, then grant funds may be recovered from the grantee by the Agency in accordance with Departmental Regulations.

(a)Type of applicant. The Applicant must be one of the following:

(1)A Public Body/Government Entity;

(2)An Indian Tribe; or

(3)A Nonprofit entity.

(b)Financial strength and expertise. The Applicant must have sufficient financial strength and expertise in activities proposed in the application to ensure accomplishment of the described activities and objectives.

(1)Financial strength will be analyzed by the Agency based on financial data provided in the application. The analysis will consider the applicant's tangible net worth, which must be positive, and whether the applicant has dependable sources of revenue or a successful history of raising revenue sufficient to meet cash requirements.

(2)Expertise will be analyzed by the Agency based on the applicant staff's training and experience in activities similar to those proposed in the application and, if consultants will be used, on the staff's experience in choosing and supervising consultants.

(c)Universal identifier and system for awards management. Unless exempt under 2 CFR 25.110, the Applicant must:

(1)Be registered in the System for Awards Management (SAM) prior to submitting an application;

(2)Maintain an active SAM registration with current information at all times during which it has an active Federal award or an application under consideration by the Agency; and

(3)Provide its Unique Entity Identifier (UEI) in each application it submits to the Agency. The UEI is included on the Standard Form (SF) 424, “Application for Federal Assistance.”

(d)Delinquent debt. The applicant must not have any delinquent debt to the Federal Government. If an applicant has any delinquent debt to the Federal Government, the applicant will be ineligible to receive any funds obligated under this subpart until the debt has been paid.

(e)Legal authority and responsibility. Each Applicant must have the legal authority necessary to apply for and carry out the purpose of the grant.

4280.417Project eligibility.#

For a Project to be eligible for funding under this subpart, the proposed Project must meet each of the requirements specified in paragraphs (a) through (e) of this section.

(a)Types of projects. Grant funds may be used for Projects identified in either paragraph (a)(1) of this section, business opportunity type grants, or paragraph (a)(2) of this section, business enterprise type grants. Unless otherwise announced in a Notice of Solicitation of Applications, the Agency will set aside 10 percent of its RBDG appropriation for business opportunity type grants. The Agency reserves the right to reallocate funds set aside for business opportunity type grants to business enterprise type grants if it becomes apparent to the Agency that there is insufficient demand for the funds set aside for the business opportunity type grants.

(1)Business opportunity Projects. Grant funds may be used for business opportunity Projects that include one or more of the following activities:

(i)Identify and analyze business opportunities that will use local rural materials or human resources. This includes opportunities in export markets, as well as feasibility and business plan studies;

(ii)Identify, train, and provide Technical Assistance to existing or prospective rural entrepreneurs and managers;

(iii)Establish Business Support Centers and otherwise assist in the creation of new Rural businesses;

(iv)Conduct local community or multi-county Economic Development Planning;

(v)Conduct leadership development training of existing or prospective adult rural entrepreneurs and managers;

(vi)Establish centers for training, technology, and trade that will provide training to Rural businesses in the utilization of interactive communications technologies to develop international trade opportunities and markets; or

(vii)Pay reasonable fees and charges for professional services necessary to conduct the Technical Assistance, training, or planning functions.

(2)Business enterprise projects. Grant funds may be used to finance and/or develop Small and Emerging Businesses in Rural Areas including, but not limited to, the following activities:

(i)Acquisition and development of land, easements and rights-of-way;

(ii)Construction, conversion, enlargement, repairs or modernization of buildings, plants, machinery, equipment, access streets and roads, parking areas, utilities, and pollution control and abatement facilities;

(iii)Provision of loans for startup operating cost and working capital;

(iv)Reasonable fees and charges for professional services necessary for the planning and development of the Project;

(v)Establishment of a revolving loan fund to provide financial assistance to third parties through a loan; and

(vi)Establishment, expansion, and operation of Rural distance learning networks or development of Rural learning programs that provide educational instruction or job training instruction related to potential employment or job advancements for adult students;

(vii)Provision of Technical Assistance for Small and Emerging Businesses, including but not limited to feasibility studies and business plans; and/or

(viii)Provision of Technical Assistance and training to rural communities for the purpose of improving passenger transportation services or facilities.

(b)Result of projects. (1) For business opportunity type grants, the Project must have a reasonable prospect that the Project will result in the Economic Development of a Rural Area.

(2)For business enterprise type grants, the Project must have a reasonable prospect that it will result in the development or financing of Small and Emerging Businesses.

(c)Basis for success or failure. Grants may be made only when the application demonstrates a need for the Project and includes a basis for determining the success or failure of the Project and individual major elements of the Project and outlines procedures that will be taken to assess the Project's impact at its conclusion.

(d)Local and area-wide strategic plans. Business opportunity type grants may be made only when the proposed Project is consistent with any local and area-wide strategic plans for community and Economic Development, coordinated with other Economic Development activities in the Project area, and consistent with any Rural Development State Strategic Plan.

(e)An applicant is permitted to use up to 10 percent of the amount provided under this subpart to construct, improve, or acquire broadband infrastructure related to the project financed, subject to the requirements of 7 CFR part 1980, subpart M.

4280.418-4280.420-4280.420 [Reserved]#

4280.421Term requirement.#

A grant may be considered for the amount needed to assist with the completion of a proposed Project, provided that the Project can reasonably be expected to be completed within 1 full year after it has begun.

4280.422Joint funding.#

To the extent permitted by law, Agency grant funds may be used jointly and in proportion with funds furnished by the grantee or from other sources including Agency loan funds.

4280.423Ineligible uses of grant funds.#

Grant funds may not be used towards any of the uses identified in paragraphs (a) through (n) of this section.

(a)Duplicate current services or substitute support previously provided. If the current service is inadequate, however, grant funds may be used to expand the level of effort or services beyond what is currently being provided.

(b)Pay costs of preparing the application package for funding under this program or any other program.

(c)Pay costs for any expenses incurred prior to receipt of a full application, except for those permitted under Departmental Regulations.

(d)Fund political activities.

(e)Pay for assistance to any private business enterprise which does not create and/or support jobs in the United States.

(f)Pay any judgment or debt owed to the United States.

(g)Fund Agriculture Production either directly or through horizontally integrated livestock operations except for commercial nurseries, timber operations or limited Agricultural Production related to Technical Assistance Projects. The following are not considered Agriculture Production:

(1)Aquaculture, including conservation, development, and utilization of water for aquaculture;

(2)Commercial fishing;

(3)Commercial nurseries engaged in the production of ornamental plants and trees and other nursery products such as bulbs, flowers, shrubbery, flower and vegetable seeds, sod, and the growing of plants from seed to the transplant stage;

(4)Forestry, which includes businesses primarily engaged in the operation of timber tracts, tree farms, and forest nurseries and related activities such as reforestation; or

(5)The growing of mushrooms or hydroponics.

(h)To finance comprehensive area-wide type Planning. This does not preclude the use of grant funds for Planning for a given Project.

(i)To make loans when the rates, terms, and charges for those loans are not reasonable or would be for purposes not eligible under 7 CFR part 4274, subpart D.

(j)For programs operated by cable television systems.

(k)To fund a part of a Project that is dependent on other funding unless there is a firm commitment of the other funding to ensure completion of the Project.

(l)To pay for Technical Assistance that duplicates assistance provided to implement an action plan funded by the Forest Service (FS) under the National Forest-Dependent Rural Communities Economic Diversification Act for 5 continuous years from the date of grant approval by the FS. To avoid duplicate assistance, the grantee shall coordinate with FS and the Agency to ascertain if a grant has been made in a substantially similar geographical or defined local area in a State for Technical Assistance under the FS program. The grantee will provide documentation to FS and the Agency regarding the contact with each agency.

(m)Pass through grants. Pass through grants are for, but not limited to:

(1)The purchase, refurbishing, or remodeling of real estate for use as a business incubator without charging a fair market rental;

(2)The purchase of equipment for use by an ultimate recipient without charging a fair market rental; and

(3)The making of a Revolving Loan Fund (RLF) loan without taking appropriate security to reasonably assure repayment of the loan.

(n)For a Project that would result in the transfer of existing employment or business activity more than 25 miles from its existing location.

4280.424-4280.426-4280.426 [Reserved]#

4280.427Application.#

Applications for an RBDG grant as specified in § 4280.417(a)(1) and (2) must contain the following:

(a)An original and one copy of SF 424, “Application For Federal Assistance (For Non-construction);”

(b)Copies of applicant's organizational documents showing the applicant's legal existence and authority to perform the activities under the grant;

(c)A proposed scope of work, including a description of the proposed Project, e.g., RLF, Technical Assistance, Industrial Site, Business Opportunity and Other Business Development, details of the proposed activities to be accomplished and timeframes for completion of each task, the number of months duration of the Project, and the estimated time it will take from grant approval to beginning of Project implementation;

(d)A written narrative that includes, at a minimum, the following items:

(1)An explanation of why the Project is needed, the benefits of the proposed Project, and how the Project meets the grant eligible purposes;

(2)Area to be served, identifying each governmental unit, i.e. town, county, etc., to be affected by the Project;

(3)Description of how the Project will coordinate Economic Development activities with other Economic Development activities within the Project area;

(4)Business to be assisted, if appropriate, and Economic Development to be accomplished;

(5)An explanation of how the proposed Project will result in newly created, increased, or supported jobs in the area and the number of projected new and supported jobs within the next 3 years;

(6)A description of the applicant's demonstrated capability and experience in providing the proposed Project assistance or similar Economic Development activities, including experience of key staff members and persons who will be providing the proposed Project activities and managing the Project;

(7)The method and rationale used to select the areas and businesses that will receive the service;

(8)A brief description of how the work will be performed including whether organizational staff or consultants or contractors will be used; and

(9)Other information the Agency may request to assist it in making a grant award determination;

(e)The latest 3 years of financial information to show the applicant's financial capacity to carry out the proposed work. If the applicant is less than 3 years old, at a minimum, the information should include all balance sheet(s), income statement(s) and cash flow statement(s). A current audited report is required if available;

(f)Intergovernmental review comments from the State Single Point of Contact, or evidence that the State has elected not to review the program under Executive Order 12372;

(g)Documentation regarding the availability and amount of other funds to be used in conjunction with the funds from the RBDG;

(h)A budget which includes salaries, fringe benefits, consultant costs, indirect costs, and other appropriate direct costs for the Project; and

(i)RBDG construction Project grants must conform with 7 CFR part 1924, subpart A requirements.

4280.428Strategic economic and community development.#

Applicants with projects that support the implementation of Strategic Community Investment Plans are encouraged to review and consider 7 CFR part 1980, subpart K, which contains provisions for providing priority to projects that support the implementation of Strategic Community Investment Plans on a multi-jurisdictional and multi-sectoral basis.

4280.429[Reserved]#

4280.430Notification of decision.#

When the Agency has determined that an application is not eligible or that no further action will be taken, the Agency will notify the applicant in writing of the reasons why the application was not favorably considered and provide any appeal rights.

4280.431-4280.433-4280.433 [Reserved]#

4280.434General processing and scoring provisions.#

The Agency will review each application for assistance in accordance with the priorities established in § 4280.435. The Agency will assign each application a priority rating and will select applications for funding based on the priority ratings and the total funds available to the program.

(a)Applications. The Agency will score each application based on the information contained in the application and its supporting information. All applications submitted for funding must contain sufficient information to permit the Agency to complete a thorough priority rating.

(b)Unfunded applications. The Agency will notify eligible applicants if funds are not available. If an applicant wishes to have their application maintained in an active file for future consideration, the applicant must revise and update their application in writing for the Agency to reconsider in a future funding cycle.

4280.435Scoring criteria.#

The Agency will use the criteria in this section to score applications for purposes identified under § 4280.417(a)(1)and (2).

(a)Leveraging. If the grant will fund a critical element of a larger program of Economic Development, without which the overall program either could not proceed or would be far less effective, or if the program to be assisted by the grant will also be partially funded from other sources, points will be awarded as follows. If points are awarded for leveraging, funds must be spent proportionally, and if leveraged funds are not utilized proportionately with the grant, the Agency reserves the right to take any legal action, including terminating the grant.

(1)If Rural Development's portion of Project funding is:

(i)Less than 20 percent—30 points;

(ii)20 but less than 50 percent—20 points;

(iii)50 but less than 75 percent—10 points; or

(iv)75 percent or more—0 points.

(2)[Reserved]

(b)Points will be awarded for each of the following criteria met by the community or communities that will receive the benefit of the grant. However, regardless of the mathematical total of points indicated by paragraphs (b)(1) through (4) of this section, total points awarded under this paragraph (b) must not exceed 40.

(1)Trauma. Experiencing trauma due to a major natural disaster that occurred not more than 3 years prior to the filing of the application for assistance—15 points;

(2)Economic distress. The community has suffered a loss of 20 percent or more in their total jobs caused by the closure of a military facility or other employers within the last 3 years—15 points;

(3)Long-term poverty. Has experienced Long-Term poverty as demonstrated by being a former Rural empowerment zone, Rural economic area partnership zone, Rural enterprise community, champion community, or a persistent poverty county as determined by USDA's Economic Research Serviced—10 points;

(4)Population decline. Has experienced Long-Term population decline—10 points as demonstrated by the latest three decennial censuses.

(c)Population. Proposed Project(s) will be located in a community of:

(1)Under 5,000 population—15 points;

(2)Between 5,000 and less than 15,000 population—10 points; or

(3)Between 15,000 and 25,000 population—5 points.

(d)Unemployment. Proposed Project(s) will be located in areas where the unemployment rate:

(1)exceeds the State rate by 25 percent or more—20 points;

(2)exceeds the State rate by less than 25 percent—10 points; or

(3)is equal to or less than the State rate—0 points.

(e)Median household income. Proposed Project(s) will be located in areas where Median Household Income (MHI) as prescribed by section 673(2) of the Community Services Block Grant Act for a family of 4 for the State is:

(1)Less than poverty line—25 points;

(2)More than poverty line but less than 65 percent of State MHI—15 points;

(3)Between 65 and 85 percent of State MHI—10 points; or

(4)Greater than 85 percent State MHI—0 points.

(f)Experience. Applicant has evidence of successful experience in the type of activity. Evidence of successful experience may be a description of experience supplied and certified by the applicant based upon its current employees' resumes:

(1)10 or more years-30 points;

(2)At least 5 but less than 10 years-20 points;

(3)At least 3 but less than 5 years-10 points; or

(4)At least 1 but less than 3 years-5 points.

(g)Small business start-up or expansion. Applicant has evidence that small business development will be supported by startup or expansion as a result of the activities to be carried out under the grant. Written evidence of commitment by a small, or a Small and Emerging Business must be provided to the Agency, and should include the number of jobs that will be supported and created. 5 points for each letter up to 25 points.

(h)Jobs created or supported. The anticipated development, expansion, or furtherance of business enterprises as a result of the proposed Project will create and/or support existing jobs associated with the affected businesses. The number of jobs must be evidenced by a written commitment from the business to be assisted.

(1)One job for less than $5,000—25 points;

(2)one job for $5,000 but less than $10,000—20 points;

(3)one job for $10,000 but less than $15,000—15 points;

(4)one job for $15,000 but less than $20,000—10 points; or

(5)one job for $20,000 but less than $25,000—5 points.

(i)Size of grant request. Grant Projects utilizing funds available under this subpart of:

(1)less than $100,000—25 points;

(2)$100,000 to $200,000—15 points; or

(3)more than $200,000 but not more than $500,000—10 points.

(j)Indirect cost. Applicant is not requesting grant funds to cover their administrative or indirect costs-5 points.

(k)Discretionary points. Either the State Director or Administrator may assign up to 50 discretionary points to an application. Assignment of discretionary points must include a written justification. Permissible justifications are geographic distribution of funds, special Secretary of Agriculture initiatives such as Priority Communities, or a state's strategic goals. Discretionary points may only be assigned to initial grants. However, in the case where two Projects have the same score, the State Director may add one point to the Project that best fits the State's strategic plan regardless of whether the Project is an initial or subsequent grant.

4280.436-4280.438-4280.438 [Reserved]#

4280.439Grant awards and agreements.#

The Agency will award and administer RBDG grants in accordance with applicable Departmental regulations, this subpart, and the unauthorized grant provisions of 7 CFR part 1951, subpart O.

(a)Letter of conditions. The Agency will provide each approved applicant a letter of conditions, which sets out the conditions under which the grant will be made, including, but not limited to, an Agency grant agreement.

(b)Applicant's intent to meet conditions. The applicant must complete, sign and return a “Letter of Intent to Meet Conditions,” to the Agency. If applicant identifies certain conditions that the applicant cannot meet, the applicant may propose alternate conditions to the Agency. The Agency must concur with any changes proposed by the letter of conditions by the applicant before the any grant will be made.

4280.440-4280.442-4280.442 [Reserved]#

4280.443Grant monitoring and servicing.#

RBDG grants will be monitored and serviced in accordance with the grant agreement, this subpart, and 2 CFR chapter IV.

4280.444-4280.447-4280.447 [Reserved]#

4280.448Transfers and assumptions.#

The Agency will approve transfer and assumption requests on grants awarded under this subpart on a case by case basis, and then only to eligible entities under § 4280.416.

4280.449-4280.499-4280.499 [Reserved]#

4280.500OMB control number.#

The reporting and recordkeeping requirements contained in this part have been approved by the Office of Management and Budget (OMB) under the provisions of 44 U.S.C. chapter 35 and have been assigned OMB control number 0570-0070 in accordance with the Paperwork Reduction Act of 1995. You are not required to respond to this collection of information unless it displays a valid OMB control number.

United States Government work; public domain under 17 U.S.C. § 105.

Subpart A · Subpart A&#x2014;Rural Economic Development Loan and Grant Programs

4280.1Purpose.#

4280.100OMB control number.#

4280.13Applicant eligibility.#

4280.14[Reserved]#

4280.15Ultimate Recipient Projects eligible for Rural Economic Development Loan funding.#

4280.16REDL and REDG Loan terms.#

4280.17Additional REDL terms.#

4280.18[Reserved]#

4280.19REDG Grants.#

4280.2Policy.#

4280.20[Reserved]#

4280.21Eligible REDG Ultimate Recipients and Projects.#

4280.22[Reserved]#

4280.23Requirements for lending from Revolving Loan Fund.#

4280.24Revolved funds.#

4280.25Revolving Loan Fund Plan.#

4280.26Administration and operation of the Revolving Loan Fund.#

4280.27Ineligible purposes.#

4280.28[Reserved]#

4280.29Supplemental financing required for the Ultimate Recipient Project.#

4280.3Definitions.#

4280.30Restrictions on the use of REDL or REDG funds.#

4280.31-4280.35-4280.35 [Reserved]#

4280.36Other laws that contain compliance requirements for these Programs.#

4280.37Application forms and filing dates.#

4280.38Maximum amount of loans or Grants.#

4280.39Contents of an application.#

4280.4-4280.12-4280.12 [Reserved]#

4280.40[Reserved]#

4280.41Environmental review of the application.#

4280.42Application evaluation and selection.#

4280.43Discretionary points.#

4280.44Limitation on number of loans or Grants to an Intermediary.#

4280.45-4280.46-4280.46 [Reserved]#

4280.47Non-selection of applications.#

4280.48Post selection period.#

4280.49[Reserved]#

4280.50Disbursement of Zero-Interest Loan funds.#

4280.51-4280.52-4280.52 [Reserved]#

4280.53Loan payments.#

4280.54Construction procurement requirements.#

4280.55Monitoring responsibilities.#

4280.56Submission of reports and audits.#

4280.57-4280.61-4280.61 [Reserved]#

4280.62Appeals.#

4280.63Exception authority.#

4280.64-4280.99-4280.99 [Reserved]#

Subpart B · Subpart B&#x2014;Rural Energy for America Program&#x2014;Grants for Renewable Energy Systems and Energy Efficiency Improvements

4280.101Purpose.#

4280.102Organization of subpart.#

4280.103Acronyms.#

4280.104Definitions.#

4280.105[Reserved]#

4280.106Conflict of interest.#

4280.107[Reserved]#

4280.108Compliance with other laws and regulations.#

4280.109-4280.119-4280.119 [Reserved]#

4280.120Applicant eligibility.#

4280.121[Reserved]#

4280.122Project eligibility.#

4280.123Reserved funds eligibility.#

4280.124[Reserved]#

4280.125Use of funds.#

4280.126-4280.130-4280.130 [Reserved]#

4280.131Application requirements.#

4280.132[Reserved]#

4280.133Submission requirements.#

4280.134-4280.139-4280.139 [Reserved]#

4280.140Application processing.#

4280.141Application withdrawal.#

4280.142-4280.149-4280.149 [Reserved]#

4280.150Award selection.#

4280.151Notification of successful applicants.#

4280.152Notification of unsuccessful Applicants.#

4280.153Award approval.#

4280.154-4280.159-4280.159 [Reserved]#

4280.160Reporting requirements.#

4280.161Monitoring awards.#

4280.162Transfer of obligations.#

Subpart A · Subpart A—Rural Economic Development Loan and Grant Programs

Subpart B · Subpart B—Rural Energy for America Program—Grants for Renewable Energy Systems and Energy Efficiency Improvements

Subpart C · Subpart C—Rural Energy for America Program: Grants for Energy Audits and Renewable Energy Development Assistance

Subpart D · Subpart D—Rural Microentrepreneur Assistance Program

Subpart E · Subpart E—Rural Business Development Grants