[Code of Federal Regulations]
[Title 42, Volume 1]
[Revised as of October 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 42CFR57.1505]

[Page 287]
 
                         TITLE 42--PUBLIC HEALTH
 
    CHAPTER I--PUBLIC HEALTH SERVICE, DEPARTMENT OF HEALTH AND HUMAN 
                                SERVICES
 
PART 57--GRANTS FOR CONSTRUCTION OF TEACHING FACILITIES, EDUCATIONAL IMPROVEMENTS, SCHOLARSHIPS AND STUDENT LOANS--Table of Contents
 
     Subpart P--Loan Guarantees and Interest Subsidies to Assist in 
   Construction of Teaching Facilities for Health Profession Personnel
 
Sec. 57.1505  Approval of applications.

    (a) General. Any application for loan guarantee or interest 
subsidies, or for a combination of both, may be approved by the 
Secretary, after consultation with the Council, only if he makes each of 
the applicable determinations set forth in section 721(c) of the Act. In 
addition:
    (1) Any such approval shall be subject to compliance by the 
applicant with the applicable provisions set forth in Secs. 57.106, 
57.107, 57.108, and 57.110: Provided however, That for purposes of the 
title assurance in Sec. 57.107(a) the period shall be not less than 20 
years or the term of the guaranteed loan, whichever is longer or in the 
case of interim facilities, the term of the guaranteed loan, and
    (2) Any such application may be approved by the Secretary only if he 
determines:
    (i) That the applicant will have sufficient financial resources to 
enable him to comply with the terms and conditions of the loan;
    (ii) That the applicant has the necessary legal authority to 
finance, construct, and maintain the proposed project, to apply for and 
receive the loan, and to pledge or mortgage any assets or revenues to be 
given as security for such loan;
    (iii) That the loan will be made only with respect to the initial 
permanent financing of the project;
    (iv) That the loan will be secured by a lien against the facilities 
to be constructed or against other security satisfactory to the 
Secretary specified in Sec. 57.2210;
    (v) That the rate of interest on the loan does not exceed such 
percent per annum as the Secretary determines to be reasonable, taking 
into account the range of interest rates prevailing in the private 
market for similar loans and the risks assumed by the United States; and
    (vi) Such additional determinations as the Secretary finds necessary 
with respect to particular applications in order to protect the 
financial interests of the United States.
    (b) Loan guarantees. In addition to the requirements of paragraph 
(a) of this section, any application for a loan guarantee may be 
approved by the Secretary only if he determines that the loan with 
respect to which such guarantee is sought would not be available to the 
applicant on reasonable terms and conditions without such guarantee. To 
assist the Secretary in making such determination, each applicant for a 
loan guarantee shall submit statements from at least three non-Federal 
institutions normally engaged in making long-term loans for 
construction, describing whether, and the terms and conditions under 
which, each institution would make a loan to the applicant for the 
project described in the application.
    (c) Interest subsidies. In addition to the requirements of paragraph 
(a) of this section, any application for interest subsidies may be 
approved by the Secretary only if he determines that without such 
interest subsidy payments the applicant would not, over a substantial 
portion of the loan term, be able to repay the principal and interest of 
the loan without jeopardizing the quality of the educational program.