---
kind: "range"
citation: "7 C.F.R. §§ 5001.304–5001.307"
title: "7"
from: "5001.304"
to: "5001.307"
count: 4
url: "https://uscodex.org/cfr/7/5001.304..5001.307"
---

# §5001.304. Specific application requirements for CF projects.


In addition to the requirements specified in [§ 5001.303](/cfr/7/5001.303.md) as applicable, a lender seeking a loan guarantee for a CF project must submit a financial feasibility report prepared by a qualified firm or individual acceptable to the Agency. All projects financed under this section must meet the financial feasibility requirements of this section and must be based on projected taxes, assessments, revenues, fees, or other sources of revenues in an amount sufficient to provide for project operation and maintenance, debt payments, and compliance with lender reserve requirements, when applicable. Other sources of revenue or existence of payment guarantors are particularly important in considering the feasibility of eligible recreation projects. The financial feasibility report must take into consideration any interest rate adjustment that may be instituted under the terms of the promissory note. Financial projections for projects that are assisted living facilities, skilled nursing facilities, or similar types of eligible residential facilities must be based on no more than 90 percent occupancy. Utility projects dependent on user fees for debt repayment shall base their income and expense forecast on user estimates supported by either a State statute or local ordinance requiring mandatory hookup or signed and enforceable user agreements. If the primary use of the essential community facility is by a business and the success or failure of the facility is dependent on that business, then the economic viability of that business must also be assessed. For projects that include the purchase and installation of RES that meet the eligibility requirements of [§ 5001.103(a)(8)](/cfr/7/5001.103.md?p=a-8), a technical report on the RES as outlined in § [5001.307(e)(1)](/cfr/7/5001.307.md?p=e-1) and [(2)](/cfr/7/5001.307.md?p=e-2), as applicable, will be included with the applicable financial feasibility report. The type of financial feasibility report required will depend upon the size of the guaranteed loan, the collateral securing the guaranteed loan, and the financial history of the borrower. The two types of financial feasibility report and when they are required are described in paragraphs [(a)](#a) and [(b)](#b) of this section.

- (a) **Financial feasibility analysis.** The financial feasibility analysis will be prepared by a qualified firm or individual who may be the lender. Financial feasibility analysis requirements are outlined in appendix B to subpart D of this part. The lender's credit evaluation may serve as the financial feasibility analysis provided it includes the items outlined in appendix B to subpart D of this part. A financial feasibility analysis will be required if any of the following circumstances exist:
  - (1) Guaranteed loans of $25 million or less to existing community facilities;
  - (2) Guaranteed loans secured by a general obligation bond, or other tax supported income sufficient to pay the debt service for the life of the loan; or
  - (3) Borrowers with audited financial statements, if the last three years indicate the ability to pay all existing and new debt service.
  - (4) The Agency may require a feasibility study when the lender's analysis, borrower's business plan, or project information is not sufficient to determine the technical feasibility, market feasibility, or economic viability of the project.
    - (i) For guaranteed loans greater than $1,000,000.00 to a new entity or an entity conducting a new activity, a feasibility study prepared by an independent qualified consultant acceptable to the Agency is required. The scope of the feasibility study will be determined by the Agency and is dependent on the complexity of the project and the borrower.
    - (ii) For loans of $1,000,000.00 or less to new and existing entities, the Agency may require a feasibility study when the lender's analysis or other borrower information is not sufficient to determine the technical feasibility or economic viability of the project, or if the project will significantly affect the operations of a borrower who is an existing entity and its historic cash flow.
- (b) **Financial feasibility study with examination opinion.** The report must be prepared in accordance with the standards of attestation of the American Institute of Certified Public Accountants, and the preparer must have the requisite professional liability insurance in place. A financial feasibility study with examination opinion will be required for all guaranteed loans that do not meet the requirements for a financial feasibility analysis outlined in [paragraph (a)](#a) of this section. The financial feasibility study with examination opinion will typically include the items outlined in appendix B to [subpart D](/cfr/7/subpartD.md) of this part.

# §5001.305. Specific application requirements for WWD projects.


In addition to the requirements specified in [§ 5001.303](/cfr/7/5001.303.md), a lender seeking a loan guarantee for a WWD project must submit the documents specified in [paragraphs (a) through (c)](#a..c) of this section.

- (a) **Engineering documentation.**
  - (1) Engineering documentation must meet the level of detail the lender would typically require for a standard commercial loan, and include, at a minimum, a description of the proposed project, a cost estimate, the number of residential and non-residential connections, and the population served. The lender may request assistance to clarify the Agency's requirements and regulations; however, the Agency does not provide technical oversight or recommendations as to the technical feasibility of the project.
  - (2) The lender must ensure that the project is designed utilizing accepted architectural and engineering practices and conforms to applicable Federal requirements (e.g., the seismic requirements of Executive Order 12699 (55 FR 835, [3 CFR](/cfr/3.md), 1990 Comp., p. 269), the debarment requirements of [2 CFR part 180](/cfr/2/part180.md) as supplemented by [2 CFR part 417](/cfr/2/part417.md), American Iron and Steel ([Section 746](/cfr/7/746.md) of Title VII of the Consolidated Appropriations Act of 2017), and the Copeland Anti-Kickback Act ([18 U.S.C. 874](/usc/18/874.md))); State, local and Tribal codes and requirements; and facility plans or plans and specifications reviewed and approved by the applicable State, local and/or Tribal regulatory agency. The lender must also ensure that the planned project will be completed within the available funds and once completed, will be suitable for the borrower's needs. Upon completion of the project, the lender must certify that all applicable Federal requirements were met.
- (b) **Feasibility considerations.** All projects financed under this part must be based on projected taxes, assessments, revenues, fees, or other sources of revenues in an amount sufficient to provide for project operation and maintenance, any reserves required by the lender, and debt payment. The lender's financial credit analysis must take into consideration any interest rate adjustment that may be instituted under the terms of the loan note guarantee.
- (c) **Credit analysis requirements.** In addition to the requirements of [§ 5001.202](/cfr/7/5001.202.md), if the majority user of the system is a business and the financial success of the system is dependent on that business, then the economic viability of that business must be assessed.
- (d) **Domestic procurement preference.**
  - (1) **American Iron and Steel (AIS).** Guaranteed loans must comply with AIS requirements. Lenders and borrowers are responsible for meeting the AIS requirements of [Section 746](/cfr/7/746.md) of Title VII of the Consolidated Appropriations Act of 2017 and the continuing resolutions adopted thereafter.
  - (2) **Build America, Buy America Act (BABAA).** BABAA was enacted as part of the Infrastructure and Jobs Act (Pub. L. 117-58) on November 15, 2021 and became effective on May 14, 2022. Under [Section 70914(a)](/cfr/7/70914.md?p=a) of BABAA, “none of the funds made available for a Federal financial assistance program for infrastructure may be obligated for a project unless all of the iron, steel, manufactured products, and construction materials used in the project are produced in the United States.” Additional information may be found on the Agency's Build America, Buy America website at https://www.rd.usda.gov/build-america-buy-america.
  - (3) **Compliance.** Owners are ultimately responsible for compliance with the domestic procurement preference requirements and should consult with the Agency early in project development. Compliance must be certified to prior to the issuance of the loan note guarantee. The lender must include any domestic preference language, provided by the Agency, in the loan agreement and other appropriate loan documents.

# §5001.306. Specific application requirements for B&I projects.


In addition to the requirements specified in [§ 5001.303](/cfr/7/5001.303.md), as applicable, a lender requesting a B&I loan guarantee must submit the information specified in [paragraph (a)](#a) of this section if the guaranteed loan amount is more than $600,000, or in (b) of this section if the guaranteed loan amount is $600,000 or less.

- (a) **Applications requesting a guaranteed loan in an amount greater than $600,000.**
  - (1) The Agency is required to submit project information to the United States Department of Labor for their concurrence if the proposed guaranteed loan is in excess of $1,000,000.00 and will increase direct employment by more than 50 employees. The lender must provide sufficient project and demographic information to the Agency for completion of a Department of Labor review.
  - (2) **A pro forma balance sheet projected for loan closing.**
  - (3) The Agency may require a feasibility study when the lender's analysis, borrower's business plan, or project information is not sufficient to determine the technical feasibility, market feasibility, or economic viability of the project.
    - (i) For guaranteed loans greater than $1,000,000.00 to a new business, a feasibility study prepared by an independent qualified consultant acceptable to the Agency is required. The scope of the feasibility study will be determined by the Agency and is dependent on the complexity of the project and the borrower.
    - (ii) For loans of $1,000,000.00 or less to new and existing businesses, the Agency may require a feasibility study when the lender's analysis or other borrower information is not sufficient to determine the technical feasibility or economic viability of the project, or if the project will significantly affect the operations of a borrower who is an existing business and its historic cash flow.
    - (iii) A technical report is required for RES identified in [§ 5001.307(e)](/cfr/7/5001.307.md?p=e) and for projects utilizing other integrated processing equipment and systems. The contents of the technical report must be consistent with the requirements of [§ 5001.307(e)(1)](/cfr/7/5001.307.md?p=e-1) and must provide sufficient detail to enable the Agency to determine technical merit. The report can be provided in the technical feasibility section of a feasibility study or in a separate technical report.
  - (4) For companies listed on a major stock exchange or subject to the Securities and Exchange Commission (SEC) regulations, a copy of their most recent SEC Form 10-K, “Annual Report Pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934.”
  - (5) **Current financial statements of affiliates.**
- (b) **Applications requesting a guaranteed loan in an amount of $600,000 or less.** Guaranteed loan applications may be processed under this [paragraph (b)](#b) if the amount of the guaranteed loan does not exceed $600,000, provided the Agency determines that the lender's analysis, borrower's business plan, or other project or borrower information submitted by the lender is sufficient to determine the technical feasibility, market feasibility, and economic viability of the project. If any of the items in [paragraphs (a)(1) through (4)](#a-1..a-4) of this section apply, the lender must collect the information and maintain it in their file. A lender may need to resubmit or modify an application if the application does not contain sufficient information for the Agency to make an informed loan approval decision.
  - (1) Lenders submitting applications under this [paragraph (b)](#b) must include the following information:
    - (i) Narrative description of the project including the history of the borrower and adequacy of cash flow and borrower equity;
    - (ii) Required financial statements including a current Agency-acceptable balance sheet and year-to-date income statements;
    - (iii) Security available for the guaranteed loan including collateral and payment guarantees;
    - (iv) Strengths and weaknesses of the guaranteed loan and the Lender's need for the loan guarantee to mitigate specific risks.
  - (2) The lender may elect to not submit the following application documentation to the Agency, but must have the information available in its file for review:
    - (i) Narrative description of management capabilities and corporate structure of the borrower;
    - (ii) Environmental information for the project and any environmental reviews;
    - (iii) Agency-acceptable historical balance sheets and income statements of the borrower and its affiliates;
    - (iv) **Financial statements of any personal, partnership, or corporate guarantors.**

# §5001.307. Specific application requirements for REAP projects.


In addition to the requirements specified in [§ 5001.303](/cfr/7/5001.303.md), a lender seeking a loan guarantee for a REAP project must submit the information identified below based on total project costs.

- (a) **Borrower eligibility information.**
  - (1) Eligible borrowers must meet the definition of agricultural producer or rural small business as defined in [§ 5001.3](/cfr/7/5001.3.md). Agricultural producers seeking funding for a RES or EEI project may apply as either a rural small business or as an agricultural producer, provided they meet the applicable eligibility requirements. Agricultural producers seeking funding for an EEE project must be eligible and apply as an agricultural producer.
  - (2) The borrower must provide the primary NAICS code applicable to the borrower's business concern and certify on the Agency approved application form or system that it meets the definition of agricultural producer or rural small business. The Agency reserves the right to request supporting documentation to verify borrower eligibility.
- (b) **Borrower description.** Describe the ownership of the borrower, including the information specified in [paragraphs (b)(1) through (3)](#b-1..b-3) of this section, as applicable. Include a description of the borrower's existing farm, ranch, or business operation, including how long the borrower has been in operation. Rural small businesses and agriculture operations owned by Tribes should provide documentation to adequately show the separation of the applicant and the Tribal government.
  - (1) Describe how the borrower meets the ownership and control requirements as identified in [§ 5001.126(e)(2)](/cfr/7/5001.126.md?p=e-2).
  - (2) For each entity(ies) the borrower controls or entity(ies) it is controlled by, provide a list of the individual owners with their contact information. Describe the relationship between the borrower and the other entity(ies), including percentage of ownership and control, management, passive investor ownership, and any products exchanged. Organizational charts to demonstrate the structure of the borrower should be submitted when available.
  - (3) **Identify the ethnicity, race, and gender of the borrower.** Identify if the borrower is a veteran. This information is optional and is not required for a complete application but may be used by the Agency to award priority points.
- (c) **Project information.** Provide information concerning the project as a whole and its relationship to the borrower's operations, including:
  - (1) **Identification as to whether the project is an RES, EEI, or EEE project.** Include a description and the location of the project;
  - (2) Description of how the project will have a positive effect on resource conservation, public health, and the environment;
  - (3) Identification of the amount of funds and the source(s) of funds the borrower is proposing to use for the project. Provide written commitments for funds at the time the application is submitted to receive points under this scoring criterion.
    - (i) For project funding provided by the borrower, documentation may include bank statements that demonstrates availability of funds.
    - (ii) For project funding that comes from a third party, a commitment letter signed by an authorized official of the third party. The letter must be specific to the project and must identify the dollar amount of any loan or other funding and any applicable rates and terms. If the third-party commitment is for a loan, the commitment must be firm; a letter-of-intent or pre-qualification letter subject to underwriting requirements or contingencies is not acceptable.
- (d) **Feasibility study.** For RES projects only, when deemed necessary by the lender or Agency, an analysis conducted in conformance with the definition of feasibility study found in [§ 5001.3](/cfr/7/5001.3.md) and with applicable content in appendix A to [subpart D](/cfr/7/subpartD.md) of this part.
- (e) **Technical report.** All eligible projects must have technical merit and provide information as identified in [§ 5001.106(e)](/cfr/7/5001.106.md?p=e), [§ 5001.107](/cfr/7/5001.107.md), or § [5001.108](/cfr/7/5001.108.md) and [(e)(1) through (3)](/cfr/7/5001.108.md?p=e-1..e-3) of this section.
  - (1) **Level of detail.** Information provided must be in sufficient detail to enable the Agency to determine the technical merit of the project. Design drawings and process flowcharts are encouraged as exhibits. The technical report requirements can be provided in the technical feasibility section of a feasibility study, instead of completing a separate technical report.
    - (i) Sufficient information to enable the calculation of simple payback as defined in [§ 5001.3](/cfr/7/5001.3.md);
    - (ii) For RES projects, sufficient information to enable the calculation of the percentage of historical use of energy compared to the amount of renewable energy that will be generated once the project is operating at its steady state operating level. If the project is closely associated with a residence, satisfactory demonstration must be made that 50 percent or more of the projected renewable energy will benefit the agricultural operation or rural small business; and
    - (iii) Demonstrate that the RES, EEI, or EEE project will operate or perform over the project's useful life in a reliable, safe, and a cost-effective manner, which may include but is not limited to addressing project design, installation, operation, maintenance, and warranties.
    - (iv) In addition, the following technologies, must provide a technical report in accordance with [paragraphs (e)(1)(v) through (viii)](#e-1-v..e-1-viii) of this section, as applicable:
      - (A) Hydrogen;
      - (B) Ocean energy;
      - (C) Geothermal electric generation;
      - (D) Anaerobic digesters and biogas;
      - (E) Biomass;
      - (F) Hybrid applications;
      - (G) Renewable energy systems with storage components; and
      - (H) Energy efficiency improvements
    - (v) For total project costs in the amount of $80,000 or less, a technical report, as identified in [§ 5001.303(c)(16)](/cfr/7/5001.303.md?p=c-16), prepared in accordance with the following paragraphs, as applicable:
      - (A) **EEI technical reports.** Each EEI technical report submitted under this section must provide:

        (1) A description of the proposed EEI, including its intended purpose;

        (2) Vendor/installer certification that the EEI project uses commercially available technology;

        (3) Vendor/installer certified projections on the quantity of energy to be saved;

        (4) Certification by vendor/installer that they are qualified to complete the project as intended;

        (5) Vendor/installer certification that the EEI system will operate and perform over the project's useful life in a reliable and cost-effective manner; and

        (6) An estimate of simple payback, including all calculations, documentation, and any assumptions.

      - (B) **RES technical reports.** Each RES technical report submitted under this section must provide:

        (1) A description of the proposed RES project, including its intended purpose;

        (2) Vendor/installer certified projections on energy to be replaced and/or generated, including the quality and availability of the renewable resource to the project; if there is a residence closely associated with the RES project, the historical amount of energy used by the residence and the historical amount of energy used by the agricultural operation or rural small business, as applicable, to satisfactorily demonstrate 50 percent or more of proposed generation will benefit the agricultural operation or rural small business;

        (3) Vendor/installer certification that the RES project uses commercially available technology;

        (4) Certification that the vendor/installer is qualified to complete the project as intended;

        (5) Certification that the project will perform over its useful life in a reliable and cost-effective manner; and

        (6) The projected financial performance of the project. The description must address total project costs, revenues accrued from the sale or crediting of energy, quantity and value of energy offset, and revenue from byproducts. Include applicable investment and other production incentives and indicate if they are one time or reoccurring incentives. Provide an estimate of simple payback, including all calculations, documentation, and any assumptions.

      - (C) **EEE technical reports.** Each EEE technical report submitted under this section, regardless of total project costs, must provide:

        (1) A description of the proposed EEE and its intended purpose, including baseline data, specifications, and efficiency data;

        (2) Vendor/installer certification that the EEE project uses commercially available technology;

        (3) Vendor/installer certification of the proposed energy consumption quantity and price per unit of the energy efficiency equipment to be installed;

        (4) Certification by vendor/installer that they are qualified to complete the project as intended;

        (5) Vendor/installer certification that the EEE system will operate and perform over the project's useful life in a reliable and cost-effective manner; and

        (6) An estimate of simple payback, including all calculations, documentation, and any assumptions.

    - (vi) For EEI guaranteed loan projects with total project costs greater than $80,000, the technical report identified in [paragraph (e)(1)(v)(A)](#e-1-v-A) of this section applies, except that appendix C to [subpart D](/cfr/7/subpartD.md) of this part is to be followed to prepare the report.
    - (vii) For RES guaranteed loan projects with total project costs greater than $80,000 and up to but not including $200,000, the technical report identified in [paragraph (e)(1)(v)(B)](#e-1-v-B) of this section applies, except that appendix D to [subpart D](/cfr/7/subpartD.md) of this part is to be followed to prepare the report.
    - (viii) For RES guaranteed loan projects with estimated total project costs of $200,000 or greater, the technical report identified in [paragraph (e)(1)(v)(B)](#e-1-v-B) of this section applies, except that appendix E to [subpart D](/cfr/7/subpartD.md) of this part is to be followed to prepare the report.
  - (2) **Modifications.** If the technical report is prepared prior to the borrower's selection of a final design, equipment vendor, or contractor, or other significant decision, the borrower may modify the report and resubmit it to the Agency, provided that the overall scope of the project is not materially changed as determined by the Agency. Changes in the technical report may require additional environmental documentation in accordance with [7 CFR part 1970](/cfr/7/part1970.md).
  - (3) **Hybrid projects.** If the application is for a hybrid project, technical reports must be prepared for each technology that comprises the hybrid project.