---
kind: "section"
citation: "7 U.S.C. § 2009g"
title: "7"
title_heading: "Agriculture"
number: "2009g"
heading: "Guarantee and commitment to guarantee loans"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/7/2009g"
units:
  - "Chapter 50 — Agricultural Credit"
  - "Subchapter V — Rural Community Advancement Program"
---

# §2009g. Guarantee and commitment to guarantee loans

- (a) **“Eligible public entity” defined—** In this section, the term “eligible public entity” means any unit of general local government.
- (b) **Guarantee and commitment—** The [Secretary](/usc/7/499a.md?p=b-2), on such terms and conditions as the [Secretary](/usc/7/499a.md?p=b-2) may prescribe, may guarantee and make commitments to guarantee notes or other obligations issued by eligible public entities, or by public agencies designated by the eligible public entities, for the purposes of financing [rural](/usc/7/1991.md?p=a-13-A) development activities authorized and funded under [section 2009f of this title](/usc/7/2009f.md).
- (c) **Limitation—** The [Secretary](/usc/7/499a.md?p=b-2) may not make a guarantee or commitment to guarantee with respect to a note or other obligation if the total amount of outstanding notes or obligations guaranteed under this section (excluding any amount repaid under the contract entered into under [subsection (e)(1)(A)](#e-1-A)) for issuers in the [State](/usc/7/2009.md?p=1) would exceed an amount equal to 5 times the sum of the total amount of grants made to the [State](/usc/7/2009.md?p=1) under [section 2009f of this title](/usc/7/2009f.md).
- (d) **Payment of principal, interest, and costs—** Notwithstanding any other provision of this subchapter, a [State](/usc/7/2009.md?p=1) to which a grant is made under [section 2009f of this title](/usc/7/2009f.md) may use the grant (including program income derived from the grant) to pay principal and interest due (including such servicing, underwriting, or other costs as may be specified in regulations of the [Secretary](/usc/7/499a.md?p=b-2)) on any note or other obligation guaranteed under this section.
- (e) **Repayment contract; security—**
  - (1) **In general—** To ensure the repayment of notes or other obligations and charges incurred under this section and as a condition for receiving the guarantees, the [Secretary](/usc/7/499a.md?p=b-2) shall require the issuer to—
    - (A) enter into a contract, in a form acceptable to the [Secretary](/usc/7/499a.md?p=b-2), for repayment of notes or other obligations guaranteed under this section;
    - (B) pledge any grant for which the issuer may become eligible under this subchapter; and
    - (C) furnish, at the discretion of the [Secretary](/usc/7/499a.md?p=b-2), such other [security](/usc/7/24.md?p=b) as may be considered appropriate by the [Secretary](/usc/7/499a.md?p=b-2) in making the guarantees.
  - (2) **Security—** To assist in ensuring the repayment of notes or other obligations and charges incurred under this section, a [State](/usc/7/2009.md?p=1) shall pledge any grant for which the [State](/usc/7/2009.md?p=1) may become eligible under this subchapter as [security](/usc/7/24.md?p=b) for notes or other obligations and charges issued under this section by any eligible public entity in the [State](/usc/7/2009.md?p=1).
- (f) **Pledged grants for repayments—** Notwithstanding any other provision of this subchapter, the [Secretary](/usc/7/499a.md?p=b-2) may apply grants pledged pursuant to paragraphs [(1)(B)](#e-1-B) and [(2)](#e-2) of subsection (e) to any repayments due the [United States](/usc/7/1991.md?p=a-6) as a result of the guarantees.
- (g) **Outstanding obligations—** The total amount of outstanding obligations guaranteed on a cumulative basis by the [Secretary](/usc/7/499a.md?p=b-2) pursuant to [subsection (b)](#b) shall not at any time exceed such amount as may be authorized to be appropriated for such purpose for any fiscal year.
- (h) **Purchase of guaranteed obligations by Federal Financing Bank—** Notes or other obligations guaranteed under this section may not be purchased by the Federal Financing [Bank](/usc/7/27.md?p=a).
- (i) **Full faith and credit—** The full faith and credit of the [United States](/usc/7/1991.md?p=a-6) is pledged to the payment of all guarantees made under this section. Any such guarantee made by the [Secretary](/usc/7/499a.md?p=b-2) shall be conclusive evidence of the eligibility of the obligations for the guarantee with respect to principal and interest. The validity of the guarantee shall be incontestable in the hands of a holder of the guaranteed obligations.

## Source credit

(Pub. L. 87–128, title III, § 381H, as added Pub. L. 104–127, title VII, § 761, Apr. 4, 1996, 110 Stat. 1145.)