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Catalog of Federal Domestic Assistance

Program Descriptions

10.851:  Rural Phone Loans and Loan Guarantees

Popular Name:  RUS

Objectives:  To assure that people in eligible rural areas have access to telecommunications services comparable in reliability and quality to the rest of the Nation.

PROGRAM AND AWARD	FINANCIAL AND INFORMATION CONTACTS
ELIGIBILITY REQUIREMENTS	FINANCIAL AND ADMINISTRATIVE INFO.
APPLICATION AND AWARD PROCESS	INFORMATION CONTACTS
RELATED PROGRAMS	ASSISTANCE CONSIDERATIONS
PROGRAM ACCOMPLISHMENTS	POST ASSISTANCE REQUIREMENTS

10.851 ELIGIBILITY REQUIREMENTS:

Applicant Eligibility:  Phone companies or cooperatives, nonprofit associations, limited dividend associations, mutual associations or public bodies including those located in the U.S. Territories and countries included in the Compact of Free Association Act of 1985, providing or propose to provide the basic local exchange phone service needs of rural areas, and it must be incorporated.

Beneficiary Eligibility:  Residents of rural areas, and others who may also receive phone service as a result of service provided to a rural area.

Credentials/Documentation:  None. This program is excluded from coverage under OMB Circular No. A-87.

10.851 APPLICATION AND AWARD PROCESS:

Preapplication Coordination:  Applicants must supply environmental impact information to determine whether an environmental impact assessment or an environmental impact statement will be required. This program is excluded from coverage under E.O. 12372 and OMB Circular No. A-102.

Application Procedure:  The completed loan application consists of four parts: an RUS Form 490; Application for Phone Loan or Loan Guarantee; a market survey called Area Coverage Survey (ACS); the plan and associated costs for the proposed construction called the Loan Design (LD); and other various supplementary information specified in 7 CFR 1737.22. Detailed information on applying for an RUS phone loan or loan guarantee is in 7 CFR Part 1737, available from RUS upon request. This program is excluded from coverage under OMB Circular No. A-110.

Award Procedure:  Depending on the amount of the application, and loan committee(s) recommendation, the RUS Administrator, Assistant Administrator, or appropriate Area Director makes the final decision on approval of the loan or loan guarantee upon a finding that it is economically feasible and serves the purposes of the Rural Electrification Act. Borrowers and Members of Congress are notified of the approval of a loan or loan guarantee directly, and the public is notified through normal media communications.

Deadlines:  At the end of the second and fourth calendar quarters of each year, the Administrator shall submit to Congress, a report identifying each completed application for a phone loan that has not been finally acted upon within 90 days after the date the completed application is submitted.

Range of Approval/Disapproval Time:  Normal loan processing time is from 2 to 3 months.

Appeals:  Not applicable.

Renewals:  Not applicable.

Criteria for Selecting Proposals:  Not applicable.

Examples of Funded Projects:  Not applicable.

Range and Average of Financial Assistance:  For FY 1998, Direct loans: $195,000 to $23,944,000; $12,069,500. Loan Guarantees: $375,000 to $19,424,000; $9,899,500.

10.851 RELATED PROGRAMS:

• 10.852 Rural Phone Bank Loans.

10.851 PROGRAM ACCOMPLISHMENTS:

The latest available figures show that from, October 1997 to September 30, 1998, 45 Direct loans and six loan guarantees were made.

10.851 FINANCIAL AND ADMINISTRATIVE INFO:

Federal Agency:  RURAL UTILITIES SERVICE, (DEPARTMENT OF AGRICULTURE )

Type of Assistance:  Direct Loans; Guaranteed/Insured Loans.

Obligations:  (Hardship Loans) FY 99 $75,005,000; FY 00 est $50,000,000; and FY 01 est $50,000,000. (Cost of Money Loans) FY 99 $300,000,000; FY 00 est $300,000,000; and FY 01 est $300,000,000. (FFB Treasury Loans) FY 99 $120,000,000; FY 00 est $120,000,000; and FY 01 est $120,000,000.

Budget Account Number:  12-1230-0-1-271 and 12-4230-0-3-271.

Authorization:  Rural Electrification Act of 1936, as amended, Titles II and III, 7 U.S.C. 921, 922-924, and 930-940.

Regulations, Guidelines, and Literature:  7 CFR-XVII. RUS publishes and issues upon request technical operations manuals and bulletins covering financing, construction, operation and maintenance of rural phone systems. Also available are annual statistical summaries; and Rural Electrification Act of 1936, as amended.

10.851 INFO CONTACTS:

Regional or Local Office:  None.

Headquarters Office:  Assistant Administrator, Rural Utilities Service, Department of Agriculture, Washington, DC 20250. Phone: (202) 720-9554. Use the same number for FTS. (Home Page)

(See Appendix IV for more contact info.)

10.851 ASSISTANCE CONSIDERATIONS:

Formula and Matching Requirements:  Under certain conditions, obtaining an RUS phone loan will require obtaining a concurrent Rural Phone Bank loan (see program 10.852). The statistical factor used for eligibility is any area of the United States; its territories or possessions, not within the boundaries of any city, village or borough having a population over 5,000 (farm and nonfarm). The source is the Department of Commerce's Bureau of the Census. The statistical factor used for fund allocation does not apply to this program.

Length and Time Phasing of Assistance:  Direct and guaranteed loans can be made not to exceed the economic life of facilities and equipment. (average loan maturity is 24 yrs). Provision is normally made for advances to be completed within 5 years, but this period is subject to extension if required. Advances of funds are made as required by the borrower. The terms and conditions of guaranteed loans are negotiated between the borrower and the non-RUS lender, subject to RUS approval.

Uses and Use Restrictions:  Long-term direct and guaranteed loans to qualified organizations for the purpose of financing the improvement, expansion, construction, acquisition, and operation of phone lines, facilities, or systems to furnish and improve Telecommunications service in rural areas. "Rural area" is defined as any area of the United States, its territories and insular possessions (including any areas within Micronesia, Palau) not included within the boundaries of any incorporated or unincorporated city, village, or borough having a population exceeding 5,000 inhabitants. The population figure is obtained from the most recent data available, such as from the Bureau of Census and Rand McNally and Company. For purposes of the "rural area" definition, the character of an area is determined at the time the initial loan for the system is made.

10.851 POST ASSISTANCE REQUIREMENTS:

Reports:  RUS borrowers must submit to the Rural Utilities Service regularly scheduled operating reports showing financial condition and operating progress.

Audits:  In accordance with the provisions of 7 CFR Part 3052, "Audits of States, Local Governments, and Non-Profit Organizations," which implement OMB Circular No.A-133 (Revised, June 24, 1997), "Audits of States, Local Governments, and Non-Profit Organizations," nonfederal entities that receive financial assistance of $300,000 or more in Federal awards will have a single or a program-specific audit conducted for that year. All other RUS borrowers have their books audited annually by a Certified Public Accountant. Information on audits of RUS borrowers is contained in 7 CFR Part 1773.

Records:  RUS borrowers keep the records prescribed for phone companies by the State regulatory body having jurisdiction, or by the Federal Communications Commission if there is no such regulatory body.