[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: 7CFR1779.47]

[Page 1016-1017]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER XVII--RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 1779--WATER AND WASTE DISPOSAL PROGRAMS GUARANTEED LOANS--Table of Contents
 
Sec. 1779.47  Economic feasibility requirements.

    All projects financed under the provisions of this section must be 
based on taxes, assessments, revenues, fees, or other sources of 
revenues in an amount sufficient to provide for facility operation and 
maintenance, a reasonable reserve, and debt payment. The lender is 
responsible for determining the credit quality and economic feasibility 
of the proposed loan and must address all elements of the credit quality 
in a written financial feasibility analysis which includes adequacy of 
equity,

[[Page 1017]]

cash flow, security, history, and management capabilities. Financial 
feasibility reports must take into consideration any interest rate 
adjustment which may be instituted under the terms of the note. The 
lender's financial credit analysis may also serve as the feasibility 
analysis when sufficient evidence is included to determine economic 
feasibility as well as financial viability. The borrower's consulting 
engineer may complete the financial feasibility analysis for WW systems. 
If the facility is used by businesses and the success or failure of the 
facility is dependent on individual businesses, then the economic 
viability of those businesses must be assessed.
    (a) Exceptions. The Agency loan approval official may exempt the 
lender from the requirement for an independent financial feasibility 
report (when requested by the borrower and the lender) provided the 
approval official determines that the financial feasibility analysis 
prepared by the borrower fairly represents the financial feasibility of 
the facility and the financial feasibility analysis contains an accurate 
projection of the usage, revenues, and expenses of the facility.
    (b) Insufficient information. When the lender or Agency has 
insufficient information to determine the borrower's repayment ability, 
an independent feasibility analysis is required.