[Code of Federal Regulations]
[Title 7, Volume 11]
[Revised as of January 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR1735.51]

[Page 318]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER XVII--RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 1735--GENERAL POLICIES, TYPES OF LOANS, LOAN REQUIREMENTS--TELECOMMUNICATIONS PROGRAM--Table of Contents
 
             Subpart E--Basic Requirements For Loan Approval
 
Sec. 1735.51  Required findings.

    (a) Feasibility of and security for the Loan. The borrower shall 
provide RUS with satisfactory evidence to enable the Administrator to 
determine that the security for the loan is reasonably adequate and the 
loan will be repaid on time. This finding is based on the following 
factors:
    (1) Self-liquidation of the loan within the loan amortization 
period; this requires that there be sufficient revenues from the 
borrower's system, in excess of operating expenditures (including 
maintenance and replacement), to repay the loan with interest.
    (2) Reasonable assurance of achieving the telephone market 
projections upon which the loan is based.
    (3) Economic feasibility (based on projected revenues, expenses, net 
income, maximum debt service, and rate of return on investment) for the 
proposed system using local service rate schedules appropriate for the 
area served.
    (4) Impact of the proposed loan and construction on the ratio of the 
borrower's secured debt to assets.
    (5) Projected growth in the borrower's equity.
    (6) Satisfactory experience and reputation of the system's principal 
owners and manager.
    (7) A first lien on the borrower's total system or other adequate 
security.
    (8) Fair market value of the borrower's assets as represented in its 
financial reports to RUS.
    (9) Appropriate financial and managerial controls included in the 
loan documents.
    (10) Other factors determined to be relevant by RUS.
    (b) Area coverage. The borrower shall provide RUS with satisfactory 
evidence to enable the Administrator to determine that adequate 
telephone service will be made available to the widest practical number 
of rural users during the life of the loan.
    (c) Nonduplication or certificate requirement. The borrower shall 
provide RUS with satisfactory evidence to enable the Administrator to 
determine that no duplication of service shall result from a particular 
loan for those borrowers not required by the state regulatory commission 
to have a certificate of convenience and necessity (or its equivalent). 
For borrowers required to have a certificate of convenience and 
necessity, all portions of the existing and proposed system must be 
covered by the certificate.

[54 FR 13351, Apr. 3, 1989. Redesignated at 55 FR 39395, Sept. 27, 1990, 
as amended at 56 FR 26598, June 10, 1991]