[Code of Federal Regulations]
[Title 13, Volume 1]
[Revised as of January 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 13CFR307.16]

[Page 628-629]
 
                TITLE 13--BUSINESS CREDIT AND ASSISTANCE
 
CHAPTER III--ECONOMIC DEVELOPMENT ADMINISTRATION, DEPARTMENT OF COMMERCE
 
PART 307_ECONOMIC ADJUSTMENT ASSISTANCE INVESTMENTS--Table of Contents
 
Subpart B_Special Requirements for Revolving Loan Funds and Use of Grant 
                                  Funds
 
Sec.  307.16  Effective utilization of Revolving Loan Funds.

    (a) Loan closing and disbursement schedule. (1) RLF loan activity 
must be sufficient to draw down Grant funds in accordance with the 
schedule prescribed in the award conditions for

[[Page 629]]

loan closings and disbursements to eligible RLF borrowers. The schedule 
usually requires that the RLF Recipient lend the entire amount of the 
initial RLF Capital base within three (3) years of the Grant award.
    (2) If an RLF Recipient fails to meet the prescribed lending 
schedule, EDA may de-obligate the non-disbursed balance of the RLF 
Grant. EDA may allow exceptions where:
    (i) Closed Loans approved prior to the schedule deadline will 
commence and complete disbursements within forty-five (45) days of the 
deadline;
    (ii) Closed Loans have commenced (but not completed) disbursement 
obligations prior to the deadline; or
    (iii) EDA has approved a time schedule extension pursuant to Sec.  
307.16(b).
    (b) Time schedule extensions. (1) RLF Recipients shall promptly 
inform EDA in writing of any condition that may adversely affect their 
ability to meet the prescribed schedule deadlines. RLF Recipients must 
submit a written request to EDA for continued use of Grant funds beyond 
a missed deadline for disbursement of RLF funds. RLF Recipients must 
provide good reason for the delay in their extension requests by 
demonstrating that:
    (i) The delay was unforeseen or beyond the control of the RLF 
Recipient;
    (ii) The financial need for the RLF still exists;
    (iii) The current and planned use and the anticipated benefits of 
the RLF will remain consistent with the current CEDS and the RLF Plan; 
and
    (iv) The proposal of a revised time schedule is reasonable. An 
extension request must also provide an explanation as to why no further 
delays are anticipated.
    (2) EDA is under no obligation to grant a time extension and in the 
event an extension is denied, EDA may deobligate all or part of the 
unused Grant funds and terminate the Grant.
    (c) Capital utilization standard. (1) During the Revolving Phase, 
RLF Recipients must manage their repayment and lending schedules to 
provide that at all times at least seventy-five (75) percent of the RLF 
Capital is loaned or committed. The following exceptions apply:
    (i) An RLF Recipient that anticipates making large loans relative to 
the size of its RLF Capital base may propose a Plan that provides for 
maintaining a capital utilization percentage greater than twenty-five 
(25) percent; and
    (ii) EDA may require an RLF Recipient with an RLF Capital base in 
excess of $4 million to adopt a Plan that maintains a proportionately 
higher percentage of its funds loaned.
    (2) When the percentage of loaned RLF Capital falls below the 
applicable capital utilization percentage, the dollar amount of the RLF 
funds equivalent to the difference between the actual percentage of RLF 
Capital loaned and the applicable capital utilization percentage is 
referred to as ``excess funds.''
    (i) Sequestration of excess funds. If the RLF Recipient fails to 
satisfy the applicable capital utilization percentage requirement for 
two (2) consecutive reporting intervals, EDA may require the RLF 
Recipient to deposit excess funds in an interest-bearing account 
separate from the EDA funds account. The portion of interest earned on 
the account holding excess funds attributable to the RLF Grant shall be 
remitted to the U.S. Treasury. RLF Recipients must obtain EDA's written 
authorization to withdraw any sequestered funds.
    (ii) Persistent non-compliance. An RLF Recipient will generally be 
allowed a reasonable period of time to lend excess funds and achieve the 
applicable capital utilization percentage. However, if an RLF Recipient 
fails to achieve the applicable capital utilization percentage after a 
reasonable period of time, as determined by EDA, it may be subject to 
sanctions such as suspension or termination.