[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: 7CFR1737.60]

[Page 336]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER XVII--RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 1737--PRE-LOAN POLICIES AND PROCEDURES COMMON TO INSURED AND GUARANTEED TELECOMMUNICATIONS LOANS--Table of Contents
 
              Subpart G--Project Cost Estimation Procedures
 
Sec. 1737.60  Telephone loan budget.


    (a) RUS shall prepare a ``Telephone Loan Budget'' (RUS Form 493) 
showing all costs for the proposed project and the amount of loan and 
nonloan funds to be used. The budget shall show, as applicable, amounts 
for central offices, outside plant and station equipment, right-of-way 
procurement, land, buildings, removal costs, special projects, 
engineering, vehicles and work equipment, office equipment, operating 
funds, refinancing with loan funds, debt retirement with nonloan funds, 
acquisitions, and contingencies. The amounts budgeted, exclusive of 
prior loan reserves, generally shall be rounded to the nearest $1,000.
    (1) If the loan is to be made by the Rural Telephone Bank (RTB) or 
concurrently with RTB, the budget shall include the amount required for 
the purchase of RTB Class B stock. This is 5 percent of the amount to be 
borrowed from RTB for all purposes other than the purchase of RTB Class 
B stock. The borrower may elect to use nonloan funds for all or part of 
this requirement.
    (2) The amount of funds included in any loan shall be limited for 
certain items:
    (i) Operating funds for working capital or current operating 
deficiencies shall be included only in cases of financial hardship as 
determined by the Administrator.
    (ii) Contingencies shall not exceed 3 percent of the total amount of 
loan funds to be used for construction, engineering, operating equipment 
and operating funds.
    (b) RUS shall prepare the cost estimates based on the data in RUS 
Form 494, ``Loan Design Summary,'' and RUS Form 495, ``Construction Cost 
Estimates,'' or their equivalents, and other parts of the LD submitted 
by the borrower, and on other pertinent information. See subpart D of 
this part. The amounts included in the proposed budget shall be the 
estimated costs, less the value of materials and supplies on hand or 
acquired that can be used in the proposed construction. The cost 
estimates in the LD may be adjusted by RUS in consultation with the 
borrower. See Sec. 1737.50(c).
    (c) Generally, the new loan shall be reduced by any required equity 
funds and funds available in reserves no longer needed for prior loan 
purposes to determine the proposed loan requirement.
    (d) When amounts are available in reserves no longer needed for 
prior loan purposes, RUS may, at its option, deny further advances of 
these funds if they will be used to finance projects in the proposed 
loan.
    (e) The budget shall also show, if applicable, the reserves for each 
budget item as of the date of the latest RUS Form 481, ``Financial 
Requirement Statement,'' submitted by the borrower. To ensure that 
sufficient funds are included in the budget to finance all proposed 
construction, RUS includes in the budget any funds deposited by the 
borrower for approved interim financing.