---
kind: "section"
citation: "7 C.F.R. § 3560.54"
title: "7"
number: "3560.54"
heading: "Restrictions on the use of funds."
url: "https://uscodex.org/cfr/7/3560.54"
---

# §3560.54. Restrictions on the use of funds.

- (a) **Ineligible uses of funds.** Funds may not be used for:
  - (1) Housing intended to serve temporary and transient residents, with the exception of housing to serve migrant farm workers in accordance with [§ 3560.554](/cfr/7/3560.554.md);
  - (2) Special care facilities or institutional-type homes;
  - (3) Facilities which are not in compliance with the design requirements specified in [§ 3560.60](/cfr/7/3560.60.md);
  - (4) Any costs associated with space in a housing project that is leased for commercial use or any commercial facilities except essential service-type facilities when otherwise not conveniently available;
  - (5) Specialized equipment for training and therapy;
  - (6) Operating capital for a central dining facility or any items which do not become affixed to the real estate security with the exception of household furnishings for farm labor housing units financed under sections [514](/cfr/7/514.md) and [516](/cfr/7/516.md);
  - (7) Compensation to a loan applicant for value of land contributed in excess of the equity contribution requirements in [§ 3560.63(c)](/cfr/7/3560.63.md?p=c);
  - (8) Refinancing of an applicant's debt except when the debt involves interim financing or when refinancing is necessary to obtain a release of an existing lien on land owned by a nonprofit organization;
  - (9) Payment of any fee, charge, or commission to a broker or anyone else as a developer's fee or for referral of a prospective loan applicant or solicitation of a loan;
  - (10) Payment to any officer, director, trustee, stockholder, member, or agent of an applicant; or
  - (11) **Purchasing land for a site in excess of what is needed, except when—**
    - (i) The applicant cannot acquire an alternate site or cannot acquire the needed land as a separate parcel;
    - (ii) The applicant agrees to sell the excess land as soon as practical and to apply the proceeds to the loan; and
    - (iii) Program site density requirements are met in accordance with the site requirements established under [§ 3560.58](/cfr/7/3560.58.md).
- (b) **Obligations incurred before loan approval.** Funds may not be used for expenses incurred by an applicant prior to approval except when all the following conditions are met:
  - (1) The debts were incurred for eligible purposes;
  - (2) Contracts, materials, construction, and any land purchased meet Agency standards and requirements;
  - (3) Payment of the debts will remove any attached liens and any basis for liens that may attach to the property on account of such debts; and
  - (4) **The completion of environmental review requirements in accordance with 7 CFR part 1970.**

## Notes

### Amendments

[69 FR 69106, Nov. 26, 2004, as amended at 81 FR 11049, Mar. 2, 2016]

### Authority

Authority: 42 U.S.C. 1480.

### Source

Source: 69 FR 69106, Nov. 26, 2004, unless otherwise noted.

### Amendments

[69 FR 69106, Nov. 26, 2004, as amended at 81 FR 11049, Mar. 2, 2016]