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Notes

7 C.F.R. §§ 5001.115–5001.119

5 sections in range

§5001.115. Ineligible projects—general.

7 C.F.R. § 5001.115

The Agency will not issue a loan guarantee under this part for any of the projects identified in this section, unless otherwise noted. The following are ineligible projects for the CF, WWD, B&I and REAP programs:
(a)
Any investment or arbitrage, or any speculative real estate investment other than cooperative stock, transferable stock, cooperative equity in accordance with § 5001.140 and NMTC projects in accordance with § 5001.141.
(b)
Golf courses and golf course infrastructure, including par-3 and executive golf courses; racetracks or facilities for the conduct of races by animals, professional or amateur drivers or jockeys; for-profit zoos or safaris; and publicly-owned or non-profit amusement parks, water parks, and similar recreational type facilities inherently commercial in nature and primarily used for recreational purposes.
(c)
Motion pictures and theatrical productions.
(d)
Funding of political or lobbying activities.
(e)
Guaranteeing loans made by other Federal agencies, lines of credit, or lease payments.
(f)
Projects that the Agency determines create, directly or indirectly, a conflict of interest.
(g)
Properties to be used for primarily commercial rental when the borrower has no control over tenants and services offered, except for industrial-site infrastructure development.
(h)
Projects that utilize technology, equipment, or systems that are not commercially available.
(i)
Projects that will violate the requirements of 7 CFR part 1970, or any statutes or Executive Orders regarding environmental requirements.
(j)
Projects used primarily for the purpose of housing Federal, State, or quasi-Federal agencies, unless it is typical of the area for communities to provide this space.
(k)
Community antenna television and radio services or facilities.
(l)
Telephone systems. In certain circumstances, when not eligible for assistance through the Agency's telecommunications program these projects may be eligible for assistance under this part.
(m)
New combined sanitary and storm water sewer facilities.
(n)
Except as provided in § 5001.105(b)(8), owner-occupied housing. Owner-occupied housing, such as bed and breakfasts, and hotels and motels, are only eligible when the pro-rata value of the owner's living quarters, based on square footage, is deducted from the loan proceeds.
(o)
Loans on which the interest is excludable from income under current or a successor statute of the Internal Revenue Code. Funds generated through the issuance of tax-exempt obligations cannot be used to purchase the guaranteed portion of any Agency guaranteed loan and an Agency guaranteed loan cannot serve as collateral for a tax-exempt issue.
(p)
Residential EEI projects.
(q)
Except as provided in § 5001.106(d), residential RES projects.
(r)
Loans supporting inherently religious activities, such as worship, religious instruction, proselytization, or to pay costs associated with acquisition, construction, or rehabilitation of structures for inherently religious activities, including the financing of multi-purpose facilities where religious activities will be among the activities conducted. However, religious organizations may participate in projects eligible for funding under section 306(a)(24) of the Consolidated Farm and Rural Development Act, 7 U.S.C. 1926(a)(24), provided they do not use Agency assistance for inherently religious activities in accordance with 7 CFR part 16, “Equal Opportunity for Religious Organizations.” If an organization conducts religious activities, they must be offered separately, in time, or location from programs or services supported with the guaranteed loan. Participation in the religious activities must be voluntary, and not mandatory, for the beneficiaries of the program or services. Religious organizations may not discriminate against a beneficiary or prospective beneficiary, on the basis of religion or religious beliefs. Sanctuaries, chapels, or other rooms that are used as a principal place of worship are ineligible for guaranteed financing under this part.
Notes, amendments, and revision history

Amendments

[85 FR 42518, July 14, 2020, as amended at 85 FR 62197, Oct. 2, 2020; 86 FR 70356, Dec. 10, 2021; 89 FR 79712, Sept. 30, 2024]

Authority

Authority: 5 U.S.C. 301; 7 U.S.C. 1926(a); 7 U.S.C. 1932(a); and 7 U.S.C. 8107.

Source

Source: 85 FR 42518, July 14, 2020, unless otherwise noted.

Amendments

[85 FR 42518, July 14, 2020, as amended at 85 FR 62197, Oct. 2, 2020; 86 FR 70356, Dec. 10, 2021; 89 FR 79712, Sept. 30, 2024]

§5001.116. Ineligible CF projects.

7 C.F.R. § 5001.116

The following are ineligible projects for the CF program only:
(a)
For industrial park sites, the financing of on-site utility systems or business and industrial buildings.
(b)
Inherently commercial enterprises— This type of project is typically operated by a private enterprise with an essential characteristic to produce profits. This term does not include projects operated by private enterprises on a not-for-profit basis that provide education, childcare, geriatric care, or health care to rural communities. Inherently commercial enterprises include but are not limited to: grocery stores; television and radio services or facilities; that portion of a water and/or waste disposal facility normally provided by a business or industrial user; and telecommunication facilities or services, including broadband or fiber network services that do not meet the requirements of § 5001.103(a)(6). See § 5001.103(d) for the eligibility of a commercial enterprise leasing space in an eligible project;
(c)
Projects where construction is completed prior to filing an application with the Agency. This restriction applies to construction completed by or for the borrower and does not preclude the purchase or acquisition of a building constructed by an independent third party or refinancing of debt in accordance with § 5001.102(d).
(d)
Projects where the borrower acts to circumvent the regulations provided in this subpart, causing the borrower or project being eligible when, previously, the borrower or project was ineligible.
(e)
Projects involving the purchase of existing facilities in which the transaction's purpose is to primarily retire the debt of the seller in order for the seller to continue to use the facility at a lower cost. Characteristics of ineligible purchase transactions may include the following:
(1)
An entity, which may or may not be an eligible CF borrower, forms a new eligible entity or uses an existing eligible related entity to purchase all or part of its assets;
(2)
The new entity uses CF guaranteed loan funds to purchase the assets at the agreed upon price and leases the assets back to the seller, generally at a rate which equates to the new debt payments; and
(3)
The seller uses the proceeds of the sale to retire its high-cost debt and continues to use the facilities at a lower cost.
Notes, amendments, and revision history

Amendments

[85 FR 42518, July 14, 2020, as amended at 89 FR 79712, Sept. 30, 2024]

Authority

Authority: 5 U.S.C. 301; 7 U.S.C. 1926(a); 7 U.S.C. 1932(a); and 7 U.S.C. 8107.

Source

Source: 85 FR 42518, July 14, 2020, unless otherwise noted.

Amendments

[85 FR 42518, July 14, 2020, as amended at 89 FR 79712, Sept. 30, 2024]

§5001.117. Ineligible WWD projects.

7 C.F.R. § 5001.117

The following are ineligible projects for the WWD programs only:
(a)
That portion of a project normally provided by a business or industrial user, such as wastewater pretreatment.
(b)
Provided the existing borrower has the capacity to provide adequate service to their service territory, guaranteed loan funds may not be used to take away customers or service areas of existing USDA WWD Program direct or guaranteed loan borrowers. The requirements and limitations of 7 U.S.C. 1926(b) only apply to this section.
(c)
Projects where the borrower acts to circumvent the regulations provided in this subpart, causing the borrower or project being eligible when, previously, the borrower or project was ineligible.
(d)
Projects involving the purchase of existing facilities in which the transaction's purpose is to primarily retire the debt of the seller in order for the seller to continue to use the facility at a lower cost.
Notes, amendments, and revision history

Authority

Authority: 5 U.S.C. 301; 7 U.S.C. 1926(a); 7 U.S.C. 1932(a); and 7 U.S.C. 8107.

Source

Source: 85 FR 42518, July 14, 2020, unless otherwise noted.

§5001.118. Ineligible B&I projects.

7 C.F.R. § 5001.118

The following are ineligible projects for the B&I program only:
(a)
The financing of timeshares, residential trailer parks, apartments, duplexes, or other residential housing where the primary purpose is independent housing except as authorized in § 5001.105(b)(8), or housing development sites except as authorized in § 5001.105(b)(1).
(b)
Projects eligible for funding under B&I that are in excess of $1 million that would either—
(1)
Likely result in the transfer of jobs from one area to another and increase direct employment by more than 50 employees. However, this limitation is not to be construed to prohibit assistance for the expansion of an existing business entity through the establishment of a new branch, affiliate, or subsidiary of such entity if the establishment of such branch, affiliate, or subsidiary will not result in an increase in unemployment in the area of original location or in any other area where such entity conducts business operations. An exception is when there is reason to believe that such branch, affiliate, or subsidiary is being established with the intention of closing down the operations of the existing business entity in the area or its original location or in any other area where it conducts such operations; or
(2)
Increase direct employment by more than 50 employees, which is calculated to or likely to result in an increase in the production of goods, materials, commodities, or the availability of services or facilities in the area when there is not sufficient demand for such goods, materials, commodities, services, or facilities to employ the efficient capacity of existing competitive commercial or industrial enterprises, unless such financial or other assistance will not have an adverse effect upon existing competitive enterprises in the area.
Notes, amendments, and revision history

Amendments

[85 FR 42518, July 14, 2020, as amended at 85 FR 62197, Oct. 2, 2020]

Authority

Authority: 5 U.S.C. 301; 7 U.S.C. 1926(a); 7 U.S.C. 1932(a); and 7 U.S.C. 8107.

Source

Source: 85 FR 42518, July 14, 2020, unless otherwise noted.

Amendments

[85 FR 42518, July 14, 2020, as amended at 85 FR 62197, Oct. 2, 2020]

§5001.119. Ineligible REAP projects.

7 C.F.R. § 5001.119

Owner occupied bed and breakfasts are ineligible projects in the REAP program.
Notes, amendments, and revision history

Authority

Authority: 5 U.S.C. 301; 7 U.S.C. 1926(a); 7 U.S.C. 1932(a); and 7 U.S.C. 8107.

Source

Source: 85 FR 42518, July 14, 2020, unless otherwise noted.