---
kind: "section"
citation: "34 C.F.R. § 225.21"
title: "34"
number: "225.21"
heading: "What are some examples of impermissible uses of reserve account funds?"
url: "https://uscodex.org/cfr/34/225.21"
---

# §225.21. What are some examples of impermissible uses of reserve account funds?

- (a) Grantees must not use reserve account funds to—
  - (1) Directly pay for a charter school's construction, renovation, repair, or acquisition; or
  - (2) **Provide a down payment on facilities in order to secure loans for charter schools.** A grantee may, however, use funds to guarantee a loan for the portion of the loan that would otherwise have to be funded with a down payment.
- (b) In the event of a default of payment to lenders or contractors by a charter school whose loan or lease is guaranteed by reserve account funds, a grantee may use these funds to cover defaulted payments that are referenced under [paragraph (a)(1)](#a-1) of this section.

## Notes

### Amendments

[70 FR 15003, Mar. 24, 2005, as amended at 84 FR 25998, June 5, 2019]

### Authority

Authority: 20 U.S.C. 1221e-3, 1232, and 7221c.

### Source

Source: 70 FR 15003, Mar. 24, 2005, unless otherwise noted.

### Amendments

[70 FR 15003, Mar. 24, 2005, as amended at 84 FR 25998, June 5, 2019]