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7 U.S.C. § 936b — Sale or prepayment of direct or insured loans

Federal law — U.S. Code and appendices · legal_authorities

7 U.S.C. § 936b — Sale or prepayment of direct or insured loans

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Stable record: federal_law:legal_authorities:record_usc_b0f35c821f282ec83663268e
Source file: Laws/federal/codes/united-states-code/title-7/section-936b-sale-or-prepayment-of-direct-or-insured-loans--70a90245f9.md
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Source location: Title 7, Chapter 31, § 936b; chapter-031-rural-electrification-and-telephone-service.md

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**(a) Discounted prepayment by borrowers of electric loans** (1) **In general** — Except as provided in paragraph (2), a direct or insured loan made under this chapter shall not be sold or prepaid at a value that is less than the outstanding principal balance on the loan. (2) **Exception** — On request of the borrower, an electric loan made under this chapter, or a portion of such a loan, that was advanced before May 1, 1992, or has been advanced for not less than 2 years, shall be sold to or prepaid by the borrower at the lesser of— (A) the outstanding principal balance on the loan; or (B) the present value of the loan discounted from the face value at maturity at the rate established by the Secretary. (3) **Discount rate** — The discount rate applicable to the prepayment under this subsection of a loan or loan advance shall be the then current cost of funds to the Department of the Treasury for obligations of comparable maturity to the remaining term of the loan. (4) **Tax exempt financing** — If a borrower prepays a loan under this subsection using tax exempt financing, the discount shall be adjusted to ensure that the borrower receives a benefit that is equal to the benefit the borrower would receive if the borrower used fully taxable financing. The borrower shall certify in writing whether the financing will be tax exempt and shall comply with such other terms and conditions as the Secretary may establish that are reasonable and necessary to carry out this subsection. (5) **Eligibility** (A) *In general* — A borrower that has prepaid an insured or direct loan shall remain eligible for assistance under this chapter in the same manner as other borrowers, except that— (i) a borrower that has prepaid a loan, either before or after October 21, 1992, at a discount rate as provided by paragraph (3), shall not be eligible, except at the discretion of the Secretary, to apply for or receive direct or insured loans under this chapter during the 120-month period beginning on the date of the prepayment; and (ii) a borrower that prepaid a loan before October 21, 1992, at a discount rate greater than that provided by paragraph (3), shall not be eligible— (I) except at the discretion of the Secretary, to apply for or receive direct or insured loans described in clause (i) during the 180-month period beginning on the date of the prepayment; or (II) to apply for or receive direct or insured loans described in clause (i) until the borrower has repaid to the Federal Government the sum of— (aa) the amount (if any) by which the discount the borrower received by reason of the prepayment exceeds the discount the borrower would have received had the discount been based on the cost of funds to the Department of the Treasury at the time of the prepayment; and (bb) interest on the amount described in item (aa), for the period beginning on the date of the prepayment and ending on the date of the repayment, at a rate equal to the average annual cost of borrowing by the Department of the Treasury. (B) *Effect on existing agreements* — If a borrower and the Secretary have entered into an agreement with respect to a prepayment occurring before October 21, 1992, this paragraph shall supersede any provision in the agreement relating to the restoration of eligibility for loans under this chapter. (C) *Distribution borrowers* — A distribution borrower not in default on the repayment of loans made or insured under this chapter shall be eligible for discounted prepayment as provided in this subsection. For the purpose of determining eligibility for discounted prepayment under this subsection or eligibility for assistance under this chapter, a default by a borrower from which a distribution borrower purchases wholesale power shall not be considered a default by the distribution borrower. (6) **Definitions** — As used in this subsection: (A) *Direct loan* — The term “direct loan” means a loan made under [section 904 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title7-section904&num=0&edition=prelim). (B) *Insured loan* — The term “insured loan” means a loan made under [section 935 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title7-section935&num=0&edition=prelim). **(b) Mergers of electric borrowers** Notwithstanding subsection (a), a direct or insured loan may be prepaid by an electric borrower at the lesser of the outstanding principal balance due thereon or the present value thereof discounted from the face value at maturity at the rate set by the Secretary if the borrower is an electrical organization which resulted from a merger or consolidation between a borrower and an organization which, prior to October 1, 1987, prepaid its direct or insured loans pursuant to this section. Prepayments by a borrower hereunder shall be made not later than one year after the effective date of the merger, consolidation, or other transaction. The discount rate to be set by the Secretary for direct or insured loans prepayments hereunder shall be based on the current cost of funds to the Department of the Treasury for obligations of comparable maturity to those being prepaid. If a borrower prepays using tax exempt financing, the discount shall be adjusted to make the discount equivalent to fully taxable financing. The borrower shall certify in writing whether the financing will be tax exempt and shall comply with such other terms and conditions as the Secretary may establish which are reasonable and necessary to implement this provision. As used in this section, the term “direct loan” means a loan made under [section 904 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title7-section904&num=0&edition=prelim).

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Federal law — U.S. Code and appendices · legal_authorities

7 U.S.C. § 904 — Loans for electrical plants and transmission lines

**(a) In general** The Secretary is authorized and empowered, from the sums hereinbefore authorized, to make loans for rural electrification to persons, corporations, States, Territories, and subdivisions and agencies thereof, municipalities, peoples’ utility districts and cooperative, nonprofit, or limited-dividend associations, organized under the laws of any State or Territory of the United States, for the purpose of financing the construction and operation of generating plants, electric transmission and distribution lines or systems for the furnishing and improving of electric service to persons in rural areas, including by assisting electric borrowers to implement demand side management, energy efficiency and conservation programs, and on-grid and off-grid renewable energy systems, and loans, from funds available under [section 903 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title7-section903&num=0&edition=prelim), to cooperative associations and municipalities for the purpose of enabling said cooperative associations, and municipalities to the extent that such indebtedness was incurred with respect to electric transmission and distribution lines or systems or portions thereof serving persons in rural areas, to discharge or refinance long-term debts owed by them to the Tennessee Valley Authority on account of loans made or credit extended under the terms of the Tennessee Valley Authority Act of 1933, as amended [[16 U.S.C. 831](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title16-section831&num=0&edition=prelim) et seq.]: Provided, That the Secretary, in making such loans, shall give preference to States, Territories, and subdivisions and agencies thereof, municipalities, peoples’ utility districts, and cooperative, n

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Federal law — U.S. Code and appendices · legal_authorities

7 U.S.C. § 935 — Insured loans; interest rates and lending levels

**(a) In general** The Secretary is authorized to make insured loans under this subchapter and at the interest rates hereinafter provided to the full extent of the assets available in the fund, subject only to limitations as to amounts authorized for loans and advances as may be from time to time imposed by the Congress of the United States for loans to be made in any one year, which amounts shall remain available until expended: Provided, That the Congress in the annual appropriation Act may also authorize the transfer of any excess cash in the fund for deposit into the Treasury as miscellaneous receipts: And provided further, That any such loans and advances shall not be included in the totals of the budget of the United States Government and shall be exempt from any general limitation imposed by statute on expenditures and net lending (budget outlays) of the United States. **(b) Insured loans** Loans made under this section shall be insured by the Secretary when purchased by a lender. As used in this chapter, an insured loan is one which is made, held, and serviced by the Secretary, and sold and insured by the Secretary hereunder; such loans shall be sold and insured by the Secretary without undue delay. **(c) Insured electric loans** (1) **Hardship loans** (A) *In general* — The Secretary shall make insured electric loans, to the extent of qualifying applications for the loans, at an interest rate of 5 percent per year to any applicant for a loan who meets each of the following requirements: (i) The average revenue per kilowatt-hour sold by the applicant is not less than 120 percent of the average revenue per kilowatt-hour sold by all utilities in the State in which the applicant provides service. (ii) The average residential revenue per kilowatt-hou

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Federal law — U.S. Code and appendices · legal_authorities

7 U.S.C. § 901 — Short title

This chapter may be cited as the “Rural Electrification Act of 1936”.

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Federal law — U.S. Code and appendices · legal_authorities

7 U.S.C. § 936b — Sale or prepayment of direct or insured

Page 540 TITLE 7—AGRICULTURE § 936b AMENDMENTS 1994—Pub. L. 103–354 substituted ‘‘Secretary’’ for ‘‘Rural Electrification Administration’’ in subsec. (b) and ‘‘Secretary’’ for ‘‘Administrator’’ wherever appear- ing in subsecs. (d) and (e). Statutory Notes and Related Subsidiaries PREPAYMENT OF RURAL ELECTRIFICATION LOANS DURING FISCAL YEAR 1988 Pub. L. 100–203, title I, § 1401, Dec. 22, 1987, 101 Stat. 1330–20, provided that: ‘‘(a) ELIGIBILITY TO PREPAY.—Notwithstanding sub- sections (c), (d), and (e) of section 306A of the Rural Electrification Act of 1936 (7 U.S.C. 936a(c), (d), and (e)), during fiscal year 1988, a borrower of a loan made by the Federal Financing Bank and guaranteed under sec- tion 306 of such Act (7 U.S.C. 936) may, at the option of the borrower, prepay such loan (or any loan advance thereunder) in accordance with subsections (a) and (b) of section 306A of such Act, except that any prepay- ment that would cause the total amount of such pre- payments during fiscal year 1988 to exceed $2,000,000,000 shall be subject solely to the approval of the Secretary of the Treasury. ‘‘(b) PRIORITY FOR APPROVAL.—In determining which borrowers shall be permitted to prepay loans under sub- section (a): ‘‘(1) The Administrator of the Rural Electrification Administration shall give priority to those 8 bor- rowers that were determined by the Administrator, prior to the date of the enactment of this Act [Dec. 22, 1987], to be eligible to prepay, or that prepaid, an advance under section 306A of such Act [7 U.S.C. 936a] (as in effect prior to the date of the enactment of this Act), except that to retain such priority a borrower shall— ‘‘(A) notify the Administrator in writing, within 30 days after the issuance of regulations to carry out this

Source: Supplied 2024 U.S. Code historical extraction · 7 U.S.C. § 936b

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