[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: 7CFR1744.202]

[Page 364-365]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER XVII--RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 1744--POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS--Table of Contents
 
                     Subpart E--Borrower Investments
 
Sec. 1744.202  Borrowers may make qualified investments without prior approval of the Administrator.

    (a) A borrower that equals or exceeds the minimum total assets ratio 
may make a qualified investment, defined in paragraph (b) of this 
section without prior written approval of the Administrator.
    (b) A qualified investment is a rural development investment, 
defined in paragraph (d) of this section meeting the following criteria:
    (1) Unless the borrower's commitment is a guarantee, extension of 
credit, or advance, the borrower receives any financial return accruing 
to such investment, or the borrower's proportionate share of such 
return;
    (2) Unless the borrower's commitment is a guarantee, extension of 
credit, or advance, the borrower retains title to any asset acquired 
with such investment, or the borrower's proportionate share of such 
title; and
    (3) The funds committed are the borrower's own funds. As used in 
this subpart, the term own funds shall not include proceeds of loans 
made, guaranteed or lien accommodated by RUS; funds necessary to make 
timely payments of principal and interest on loans made, guaranteed or 
lien accommodated by RUS; and funds on deposit in the cash construction 
fund-trustee account, as defined in the borrower's loan contract with 
RUS.
    (c) A rural development investment will not be considered to be a 
qualified investment to the extent that the amount of such investments 
exceeds the borrower's maximum investment ratio.
    (d) A rural development investment is an investment, extension of 
credit, advance, or guarantee by a borrower for a period longer than one 
year and for one or more of the following purposes:
    (1) Improve the economic well-being of rural residents and alleviate 
the

[[Page 365]]

problems of low income, elderly, minority, and otherwise disadvantaged 
rural residents;
    (2) Improve the business and employment opportunities, occupational 
training and employment services, health care services, educational 
opportunities, energy utilization and availability, housing, 
transportation, community services, community facilities, water 
supplies, sewage and solid waste management systems, credit 
availability, and accessibility to and delivery of private and public 
financial resources in the maintenance and creation of jobs in rural 
areas;
    (3) Improve state and local government management capabilities, 
institutions, and programs related to rural development and expand 
educational and training opportunities for state and local officials, 
particularly in small rural communities;
    (4) Strengthen the family farm system; or
    (5) Maintain and protect the environment and natural resources of 
rural areas.
    (e) As used in paragraph (d) of this section, the term rural 
development investment shall include investments by a borrower in its 
own name, in affiliated companies, and in entities not affiliated with 
the borrower.