[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: 7CFR1744.204]

[Page 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. 1744.204  Rural development investments that do not meet the ratio requirements.

    (a) Each borrower is authorized to make investments other than 
qualified investments only in accordance with the provisions of the 
borrower's mortgage with RUS. Without RUS's approval, the portion of any 
investment of funds or commitment to invest funds for any rural 
development investment that will exceed the borrower's maximum 
investment ratio or cause the borrower to fall below the minimum total 
assets ratio, must comply with the provisions of the RUS mortgage.
    (b) RUS will consider, on a case-by-case basis, requests for 
approval of rural development investments not constituting qualified 
investments. RUS may condition such approval, if granted, on such 
requirements and restrictions as RUS may determine to be in the best 
interests of the Government, including, without limitation, the 
borrower's agreement to limit dividends or distributions of capital by 
an amount specified by RUS. Requests for such approvals must be 
submitted in writing to the relevant RUS regional office and shall 
include:
    (1) A description of the rural development project and the type of 
investment to be made, such as a loan, guarantee, stock purchase or 
equity investment;
    (2) A reasonable estimate of the amount the borrower is committed to 
provide to the rural development project including investments that may 
be required in the future; and
    (3) A pro forma balance sheet and cash flow statement for the period 
covering the borrower's future commitments to the rural development 
project.
    (c) In determining whether to approve a rural development investment 
that may cause the borrower to exceed the maximum investment ratio or to 
fall below the minimum total assets ratio in the future, RUS will 
consider annual increases to the borrower's net worth and total assets 
as might be reasonably anticipated from the borrower's normal 
operations.

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