[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: 7CFR4279.126]

[Page 577]
 
                          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. 4279.126  Loan terms.

    (a) The maximum repayment for loans on real estate will not exceed 
30 years; machinery and equipment repayment will not exceed the useful 
life of the machinery and equipment purchased with loan funds or 15 
years, whichever is less; and working capital repayment will not exceed 
7 years. The term for a loan that is being refinanced may be based on 
the collateral the lender will take to secure the loan.
    (b) The first installment of principal and interest will, if 
possible, be scheduled for payment after the project is operational and 
has begun to generate income. However, the first full installment must 
be due and payable within 3 years from the date of the Promissory Note 
and be paid at least annually thereafter. Interest-only payments will be 
paid at least annually from the date of the note.
    (c) Only loans which require a periodic payment schedule which will 
retire the debt over the term of the loan without a balloon payment will 
be guaranteed.
    (d) A loan's maturity will take into consideration the use of 
proceeds, the useful life of assets being financed, and the borrower's 
ability to repay the loan. The lender may apply the maximum guidelines 
specified above only when the loan cannot be repaid over a shorter term.
    (e) All loans guaranteed through the B&I program must be sound, with 
reasonably assured repayment.