[Code of Federal Regulations]
[Title 13, Volume 1]
[Revised as of January 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 13CFR308.8]

[Page 503-504]
 
                TITLE 13--BUSINESS CREDIT AND ASSISTANCE
 
CHAPTER III--ECONOMIC DEVELOPMENT ADMINISTRATION, DEPARTMENT OF COMMERCE
 
PART 308--REQUIREMENTS FOR ECONOMIC ADJUSTMENT GRANTS--Table of Contents
 
  Subpart B--Special Requirements for Revolving Loan Fund Projects and 
                           Uses of Grant Funds
 
Sec. 308.8  Definitions.

    As used in this part:
    Closed loan means any loan for which all required documentation has 
been executed, received, and reviewed.
    Guaranteed loan means a loan made and serviced by a lending 
institution under the agreement that a third party (e.g., a governmental 
agency) will purchase the guaranteed portion if the borrower defaults.
    Program income means gross income received by the grant RLF 
recipient or the sub-recipient directly generated by a grant supported 
activity, or earned only as a result of the grant agreement during the 
grant period. Program income includes principal repayments and RLF 
income.
    Prudent lending practices means generally accepted underwriting and 
lending practices for public loan programs based on sound judgment to 
protect Federal and lender interests. Such practices cover loan 
processing, documentation, loan approval, collections, servicing, 
administrative procedures, collateral protection, and recovery actions. 
Prudent lending practices include compliance with local laws and filing 
requirements to perfect and maintain security interests in RLF 
collateral.

[[Page 504]]

    Recapitalization grants are additional grant funds awarded to 
increase the capital base of an RLF.
    RLF capital includes the funds which capitalized the RLF plus such 
earnings and fees generated by RLF activities as may be added to the RLF 
capital base to be used for lending. The original sources of capital for 
EDA RLFs are normally comprised of EDA grant funds and local cash 
matching share.
    RLF income means interest earned on outstanding loan principal, 
interest earned on accounts holding RLF funds not needed for immediate 
lending, all loan fees and loan-related charges received from RLF 
borrowers, and other income generated from RLF operations. The RLF 
recipient may use RLF income only to capitalize the RLF and/or to cover 
eligible and reasonable costs necessary to administer the RLF, unless 
otherwise provided for in the grant agreement or approved in writing by 
EDA. RLF income excludes principal repayments.
    Secondary market includes those entities that purchase an interest 
in a loan from an original lender.
    Securitization refers to the technique of securing an investment of 
new capital with the stream of income generated by one or more (usually 
a large group of) existing loans. EDA broadly defines securitization 
transactions to include techniques such as the sale of loans, pledging 
the future income stream of a loan, and similar activities, to access 
investor capital to increase available funds for lending.