[Code of Federal Regulations]
[Title 13, Volume 1]
[Revised as of January 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 13CFR308.17]

[Page 571-572]
 
                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. 308.17  Effective utilization of Revolving Loan Funds.

    (a) Loan closing and disbursement schedule. (1) RLF loan activity 
must be sufficient to draw down grant funds in accordance with the time 
schedule for loan closings and disbursements to eligible RLF borrowers 
as prescribed in the award conditions. The time schedule requires that 
the initial round of lending (i.e., the grant disbursement phase) be 
completed within three years of the grant award.
    (2) If a RLF recipient substantially fails to meet the prescribed 
time schedules for loan closings and disbursements, EDA may terminate 
the undisbursed balance of the award. Exceptions may be granted where:
    (i) Funds are needed to close and disburse funds on loans approved 
prior to the deadline and will be disbursed within 45 days of the 
deadline,
    (ii) Funds are needed to meet continuing disbursement obligations on 
loans closed prior to the deadline, or
    (iii) EDA has approved a time schedule extension.
    (b) Time schedule extension. (1) RLF recipients are responsible for 
contacting EDA as soon as conditions become known that may materially 
affect their ability to meet the approved time schedules. RLF recipients 
must submit a written request to EDA for continued use of grant funds 
beyond a missed deadline. Extension requests must provide good reason 
for the delay and demonstrate that:
    (i) The delay was unforeseen or generally beyond the control of the 
RLF recipient;
    (ii) The need for the RLF still exists;
    (iii) The current and planned use and the anticipated benefits of 
the RLF will remain consistent with the current CEDS and the RLF Plan;
    (iv) The achievement of a new proposed time schedule is reasonable; 
and
    (v) An explanation why no further delays are foreseen.
    (2) EDA is under no obligation to grant a time extension, and in the 
event an extension is denied, EDA may deobligate (terminate) all or part 
of the unused portion of the grant.
    (c) Capital Utilization Standard. (1) During the revolving phase, 
RLF recipients must manage their repayment and lending schedules such 
that at least 75 percent of the RLF's capital is loaned out or committed 
at all times. RLF income earned during a current reporting period is not 
included as RLF

[[Page 572]]

capital when calculating the capital utilization percentage. Exception:
    (i) RLF recipients that anticipate making large loans relative to 
the size of the capital base, may propose RLF Plans that call for 
holding more than 25 percent.
    (ii) EDA may require an RLF with a capital base in excess of $4 
million to adopt a Plan that maintains a proportionately higher 
percentage of their funds loaned out.
    (2) When the percentage of loaned out capital falls below the 
applicable standard, the dollar amount of the funds equivalent to the 
difference between the actual percentage of capital loaned out and the 
standard is referred to as ``excess funds.''
    (i) Sequestration of excess funds. If the capital utilization 
standard is not met for two consecutive reporting intervals, EDA may 
require the RLF recipient to deposit ``excess funds'' in an interest 
bearing account; the portion of the interest earned on that account, 
attributable to the EDA grant, will be remitted to the U.S. Treasury. 
EDA approval is required to withdraw sequestered funds.
    (ii) Persistent noncompliance. A RLF recipient will normally be 
provided a reasonable period of time to lend ``excess funds'' and 
achieve the standard. However, if a RLF recipient fails to achieve the 
standard after a reasonable period of time as determined by EDA, the 
grant may be subject to sanctions for suspension and/or termination.