[Code of Federal Regulations]
[Title 7, Volume 11]
[Revised as of January 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR1703.19]

[Page 30-31]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER XVII--RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 1703--RURAL DEVELOPMENT--Table of Contents
 
      Subpart B--Rural Economic Development Loan and Grant Program
 
Sec. 1703.19  General requirements for grant funding.

    (a) Grants made under Sec. 1703.18(a), establishment and operation 
of a revolving loan program by Borrowers, will be limited to Borrowers 
and can be made without zero-interest loans. Grants made under 
Sec. 1703.18 (b) through (h) will be made only in conjunction with zero-
interest loans, and on a pass-through basis.
    (b) Pass-through grant funding for projects under Sec. 1703.18 (b), 
(c), (f), (g) and (h) will be available for non-profit and for-profit 
entities. Pass-through grant funding for projects under Sec. 1703.18 (d) 
and (e) will be available only for non-profit entities.
    (c) All projects funded with zero-interest loans and grants will 
require supplemental funding in accordance with Sec. 1703.23. For grants 
made under Sec. 1703.18(a), the portion eligible for RUS funding may be 
fully funded with grant funds. For all other grants funded under 
Sec. 1703.18, the portion of project costs eligible for RUS funding may 
be funded up to 20 percent with grant funds.
    (d) Grant funding will be provided only to the extent necessary for 
a feasible project. A feasible project is a project which expects to 
generate sufficient income to pay operating expenses and debts and 
compensate for depreciation of equipment and facilities for the project 
which is to be funded by RUS. Depreciation must be based on allowable 
depreciation schedules as set forth by the United States Internal 
Revenue Service. Borrowers whose analyses of projects show feasibility 
without grant funds should not apply for grant funding. Borrowers 
requesting pass-through grant funds will base grant funding requests on 
borrower projected income and expense projections for the project, and 
documentation regarding depreciation of the equipment and facilities for 
the project. The Administrator will determine whether the Borrower's 
projections of income, expenses and depreciation are reasonable.
    (e) For projects that project insufficient operating revenue the 
first two years to show feasibility, borrowers should first consider the 
deferral provisions set forth in Sec. 1703.29(b) before determining the 
appropriate level of requested grant funding. Zero-interest loan and 
grant funding will be approved in accordance with paragraph (d) of this 
section based on the option which results in the lowest required grant 
percentage.
    (f) The owner of the pass-through project that receives grant funds 
will be encouraged to commit that the project will be a demonstration 
project.
    (g) Borrowers or project owners must demonstrate the availability 
and commitment of other sources of funding

[[Page 31]]

needed to complete a project in addition to RUS loan and/or grant funds, 
prior to the first advance of RUS funds.
    (h) Feasibility studies and/or technical assistance funded with 
grants under Sec. 1703.18 (b) and (c) must be performed by entities 
which are independent of the Borrower and qualified to provide such 
services. The project owner, if deemed qualified in accordance with this 
paragraph, may furnish a feasibility study under Sec. 1703.18(b). 
Entities furnishing technical assistance under Sec. 1703.18(c), must be 
independent of the project owner. To be deemed qualified, entities 
providing feasibility studies and/or technical assistance must:
    (1) Provide sufficient documentation evidencing their proven 
ability, background and experience to furnish such services; and
    (2) Provide sufficient documentation evidencing their legal 
authority and capacity to furnish such services.

[59 FR 11706, Mar. 14, 1994]