[Code of Federal Regulations]
[Title 7, Volume 11]
[Revised as of January 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR1703.61]

[Page 55]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER XVII--RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 1703--RURAL DEVELOPMENT--Table of Contents
 
      Subpart B--Rural Economic Development Loan and Grant Program
 
Sec. 1703.61  Disbursement of zero-interest loan and grant funds.

    (a) RUS will disburse zero-interest loan funds to the borrower which 
must disburse zero-interest loan proceeds to the project for approved 
purposes in accordance with the legal documents executed by the 
Administrator and the borrower and applicable RUS regulations. The 
borrower must make payments on a zero-interest loan as set forth in the 
legal documents executed by the Administrator and the borrower. The 
Borrower or project owner's share in the cost of the project must be 
utilized in advance of RUS zero-interest loan funds, or upon RUS 
approval, on a pro-rata distribution basis with loan funds during the 
disbursement period. The Borrower or project owner will not be permitted 
to provide its contribution at the end of the loan disbursement period.
    (b) RUS will disburse grant funds to the borrower which must 
disburse grant proceeds to the project for approved purposes in 
accordance with the provisions of 7 CFR part 3015 and 7 CFR part 3016, 
as appropriate, the legal documents executed by the Administrator and 
the borrower, and applicable RUS regulations. Prior to the disbursement 
of grant funds under this subpart, the Borrower will provide evidence of 
fidelity bond coverage as required by 7 CFR 3015.17. The grant portion 
of a pass-through zero-interest loan and grant will be disbursed to the 
Borrower on a reimbursement basis after all other project funds have 
been utilized and evidence is provided that the project has been 
completed. Grants to Borrowers for establishment of revolving loan funds 
will be disbursed in accordance with Sec. 1703.22 of this subpart.
    (c) If the borrower fails to satisfy all conditions, requirements, 
and terms prerequisite to the advance of zero-interest loan and/or grant 
funds as set forth in the letter of agreement or other RUS legal 
documents within 120 days from the date the borrower signs the letter of 
agreement agreeing and accepting the conditions, requirements, and terms 
of the RUS zero-interest loan and/or grant, or such later date as the 
Administrator may approve, the Administrator may rescind the zero-
interest loan and/or grant commitment.
    (d) During the period between the execution of RUS's legal documents 
and the disbursement of funds, the borrower must provide the 
Administrator written notification if the project is no longer viable or 
the borrower no longer desires a zero-interest loan or grant for the 
project. After RUS has received the borrower's notification, the 
Administrator will rescind the commitment.
    (e) The borrower must return to RUS all proceeds of the zero-
interest loan and/or grant, including any interest earned on the funds 
being returned, which have not been lent or disbursed by the borrower 
for approved purposes during the six months following the advance of the 
loan or grant funds from RUS to the borrower, or such later date as the 
Administrator may approve. If the project is under the control of the 
borrower, all proceeds of the zero-interest loan and/or grant must be 
returned to RUS, including any interest earned on the funds being 
returned, which have not been expended by the borrower for approved 
purposes before the first anniversary of the date of the advance of the 
loan or grant funds from RUS to the borrower, or such later date as the 
Administrator may approve. Authorization of any extension rests solely 
within the discretion of the Administrator.

[57 FR 44317, Sept. 25, 1992, as amended at 59 FR 11712, Mar. 14, 1994]

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