[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: 13CFR307.8]

[Page 624-625]
 
                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.  307.8  Definitions.

    In addition to the defined terms set forth in Sec.  300.3 of this 
chapter, the following terms used in this part shall have the following 
meanings:
    Closed Loan means any loan for which all required documentation has 
been, received, reviewed and executed by an RLF Recipient.
    Exempt Security means a Security that is not subject to certain SEC 
or Federal Reserve Board rules.
    Guaranteed Loan means a loan made and serviced by a third party 
lending institution under a loan guaranty agreement providing that an 
RLF Recipient will purchase the guaranteed portion of the loan in the 
event of borrower default.
    Prudent Lending Practices means generally accepted underwriting and 
lending practices for public loan programs, based on sound judgment to 
protect Federal and lender interests. Prudent Lending Practices include 
loan processing, documentation, loan approval, collections, servicing, 
administrative procedures, collateral protection and recovery actions. 
Prudent Lending Practices provide for compliance with local laws and 
filing requirements to perfect and maintain a security interest in RLF 
collateral.
    Recapitalization Grants are Investments of additional Grant funds to 
increase the capital base of an RLF.
    Revolving Phase means that stage of the RLF's business lending 
activities that commences immediately after all Grant funds have been 
disbursed to the RLF Recipient.
    RLF Capital means, at any point in time, the aggregate amount of 
cash held by the RLF Recipient from any of the following sources: Grant 
funds; Local Share; repayments of principal from RLF loans; and RLF 
Income. The initial RLF capital base is normally comprised of EDA funds 
and the cash Local Share.
    RLF Income means interest earned on outstanding loan principal and 
RLF accounts holding RLF funds (excluding interest earned on excess 
funds pursuant to Sec.  307.16(c)(2)), all fees and charges received by 
the RLF, and other income generated from RLF operations. An RLF 
Recipient may use RLF Income only to capitalize the RLF for financing 
activities and to cover eligible and reasonable costs necessary to 
administer the RLF, unless otherwise provided for in the Grant agreement 
or approved in writing by EDA. RLF Income excludes repayments of 
principal and any interest remitted to the U.S. Treasury pursuant to 
Sec.  307.16(c)(2)(i).
    RLF Third Party, for purposes of this subpart B only, means an 
Eligible Recipient or for-profit entity selected by EDA through a 
request for proposals or Cooperative Agreement to facilitate and/or 
manage the intended liquidation of an RLF.
    Sale means an EDA-approved sale by an RLF Recipient of its RLF loan 
portfolio (or a portion thereof) to a third party. A third party may 
participate in a subsequent Securitization offered in a secondary market 
transaction and collateralized by the underlying RLF loan portfolio (or 
a portion thereof).
    SEC or the Commission means the U.S. Securities and Exchange 
Commission.
    Securitization refers to the financing technique of securing an 
investment of new capital with a stream of income

[[Page 625]]

generated by aggregating similar instruments such as loans or mortgages 
into a new transferable Security.
    Security means any investment instrument issued by a corporation, 
government or other organization which offers evidence of debt or 
equity.