|
Guaranteed Program
Lender Role
The Community
Facilities Guaranteed Loan program is lender-driven. The Lender of
Record makes the application and, if approved, makes and services the
loan. In addition to making guaranteed loans, lenders may provide
interim construction.
Guarantee Against
Loss
Should a loss occur
the guarantee provides for a 90% guaranty of the losses incurred,
including interest for 90 days beyond the declaration of default and
cost of collection. The Lender of Record must retain a minimum of 5% of
the total loan amount. This amount must be part of the non-guaranteed
portion of the loan. The Lender of Record is responsible for servicing
the entire loan.
Underwriting
All projects financed
must be based on revenues, taxes, assessments, fees, or other sources of
revenues in an amount sufficient to provide for facility operation and
maintenance, a reasonable reserve, and debt payment. The lender is
responsible for determining the credit quality and economic feasibility
of the proposed loan and must address all elements of the credit quality
in a written analysis which includes adequacy of equity, cash flow,
security, history, and management capabilities.
Rates and Terms
The repayment period
is limited to the useful life of the facility, but the maximum term for
all loans in the Community Facilities program is 40 years. The interest
rate may be fixed or variable and is negotiated between the Lender of
Record and the borrower. The rates may be different for the guaranteed
portion of the financing vs. the non-guaranteed portion of the
financing; however, the interest rate changes may not exceed reasonable
rates for similar non-guaranteed loans.
Security
Security must be
sufficient for repayment of the loan to be reasonably assured from the
cash flows of the project and/or supplemented by other revenue streams
when considering the integrity and ability of project management,
soundness of the project, and the borrower’s prospective earnings. All
projects financed require a shared first priority lien (in some cases a
best available lien) on:
-
the real estate supporting the project,
or if a leasehold, a first priority leasehold mortgage;
-
the chattels or if a leasehold a first
priority leasehold claim. In some instances the best available lien
may be acceptable;
-
inventories and accounts receivable;
-
revenues, taxes, assessments, fees, or
other sources of revenues.
Collateral may be
shared pari pasu with other financing for the same project, meaning that
the security may be first priority for the benefit of all the financing
providers of the project. Revenue streams (revenues, taxes,
assessments, fees, or other revenue streams) must be sufficient to
provide for facility operation and maintenance, a reasonable reserve,
and debt payment.
Other Information
USDA Guaranteed CF Regulations 7 CFR 3575
|
Program Overview
Guaranteed Program
- Lender Role
- Guarantee Against Loss
- Underwriting
- Rates and Terms
- Security
-
Success Stories
- Other
Information
Lender
Eligibility & Benefits
Applicant
Financing
Process Check List
Lenders Handbook
Lender's Info-To-Go
Success Stories
|
