[Code of Federal Regulations]
[Title 7, Volume 15]
[Revised as of January 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR4279.114]

[Page 574-575]
 
                          TITLE 7--AGRICULTURE
 
  CHAPTER XLII--RURAL BUSINESS-COOPERATIVE SERVICE AND RURAL UTILITIES 
                   SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 4279_GUARANTEED LOANMAKING--Table of Contents
 
                  Subpart B_Business and Industry Loans
 
Sec. 4279.114  Ineligible purposes.

    (a) Distribution or payment to an individual owner, partner, 
stockholder, or beneficiary of the borrower or a close relative of such 
an individual when such individual will retain any portion of the 
ownership of the borrower.
    (b) Projects in excess of $1 million that would likely result in the 
transfer of jobs from one area to another and increase direct employment 
by more than 50 employees.
    (c) Projects in excess of $1 million that would increase direct 
employment by more than 50 employees, if the project would result in an 
increase in the production of goods for which there is not sufficient 
demand, or if the availability of services or facilities is insufficient 
to meet the needs of the business.

[[Page 575]]

    (d) Charitable institutions, churches, or church-controlled or 
fraternal organizations.
    (e) Lending and investment institutions and insurance companies.
    (f) Assistance to Government employees and military personnel who 
are directors or officers or have a major ownership of 20 percent or 
more in the business.
    (g) Racetracks for the conduct of races by professional drivers, 
jockeys, etc., where individual prizes are awarded in the amount of $500 
or more.
    (h) Any business that derives more than 10 percent of annual gross 
revenue from gambling activity.
    (i) Any illegal business activity.
    (j) Prostitution.
    (k) Any line of credit.
    (l) The guarantee of lease payments.
    (m) The guarantee of loans made by other Federal agencies.
    (n) Owner-occupied housing. Bed and breakfasts, storage facilities, 
et al, are allowed when the pro rata value of the owner's living 
quarters is deleted.
    (o) Projects that are eligible for the Rural Rental Housing and 
Rural Cooperative Housing loans under sections 515, 521, and 538 of the 
Housing Act of 1949, as amended.
    (p) Loans made with the proceeds of any obligation the interest on 
which is excludable from income under 26 U.S.C. 103 or a successor 
statute. Funds generated through the issuance of tax-exempt obligations 
may neither be used to purchase the guaranteed portion of any Agency 
guaranteed loan nor may an Agency guaranteed loan serve as collateral 
for a tax-exempt issue. The Agency may guarantee a loan for a project 
which involves tax-exempt financing only when the guaranteed loan funds 
are used to finance a part of the project that is separate and distinct 
from the part which is financed by the tax-exempt obligation, and the 
guaranteed loan has at least a parity security position with the tax-
exempt obligation.
    (q) The guarantee of loans where there may be, directly or 
indirectly, a conflict of interest or an appearance of a conflict of 
interest involving any action by the Agency.
    (r) Golf courses.