[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: 7CFR4279.181]

[Page 583-584]
 
                          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. 4279.181  Conditions precedent to issuance of Loan Note Guarantee.

    The Loan Note Guarantee will not be issued until the lender, 
including a CLP lender, certifies to the following:
    (a) No major changes have been made in the lender's loan conditions 
and requirements since the issuance of the Conditional Commitment, 
unless such changes have been approved by the Agency.
    (b) All planned property acquisition has been or will be completed, 
all development has been or will be substantially completed in 
accordance with plans and specifications, conforms with applicable 
Federal, state, and local codes, and costs have not exceeded the amount 
approved by the lender and the Agency.
    (c) Required hazard, flood, liability, worker compensation, and 
personal life insurance, when required, are in effect.
    (d) Truth-in-lending requirements have been met.
    (e) All equal credit opportunity requirements have been met.
    (f) The loan has been properly closed, and the required security 
instruments have been obtained or will be obtained on any acquired 
property that cannot be covered initially under State law.
    (g) The borrower has marketable title to the collateral then owned 
by the borrower, subject to the instrument securing the loan to be 
guaranteed and to any other exceptions approved in writing by the 
Agency.
    (h) When required, the entire amount of the loan for working capital 
has

[[Page 584]]

been disbursed except in cases where the Agency has approved 
disbursement over an extended period of time.
    (i) When required, personal, partnership, or corporate guarantees 
have been obtained.
    (j) All other requirements of the Conditional Commitment have been 
met.
    (k) Lien priorities are consistent with the requirements of the 
Conditional Commitment. No claims or liens of laborers, subcontractors, 
suppliers of machinery and equipment, or other parties have been or will 
be filed against the collateral and no suits are pending or threatened 
that would adversely affect the collateral when the security instruments 
are filed.
    (l) The loan proceeds have been or will be disbursed for purposes 
and in amounts consistent with the Conditional Commitment and Form 4279-
1. A copy of the detailed loan settlement of the lender must be attached 
to support this certification.
    (m) There has been neither any material adverse change in the 
borrower's financial condition nor any other material adverse change in 
the borrower, for any reason, during the period of time from the 
Agency's issuance of the Conditional Commitment to issuance of the Loan 
Note Guarantee regardless of the cause or causes of the change and 
whether or not the change or causes of the change were within the 
lender's or borrower's control. The lender must address any assumptions 
or reservations in the requirement and must address all adverse changes 
of the borrower, any parent, affiliate, or subsidiary of the borrower, 
and guarantors.
    (n) None of the lender's officers, directors, stockholders, or other 
owners (except stockholders in an institution that has normal stockshare 
requirements for participation) has a substantial financial interest in 
the borrower and neither the borrower nor its officers, directors, 
stockholders, or other owners has a substantial financial interest in 
the lender. If the borrower is a member of the board of directors or an 
officer of a Farm Credit System (FCS) institution that is the lender, 
the lender will certify that an FCS institution on the next highest 
level will independently process the loan request and act as the 
lender's agent in servicing the account.
    (o) The Loan Agreement includes all measures identified in the 
Agency's environmental impact analysis for this proposal (measures with 
which the borrower must comply) for the purpose of avoiding or reducing 
adverse environmental impacts of the proposal's construction or 
operation.