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Electronic Code of Federal Regulations

e-CFR data is current as of February 18, 2020

Title 7Subtitle BChapter XVIIISubchapter HPart 1980Subpart E → §1980.420


Title 7: Agriculture
PART 1980—GENERAL
Subpart E—Business and Industrial Loan Program


§1980.420   Loan guarantee limits.

The percentage of guarantee, up to the maximum allowed by this section, is a matter of negotiation between the lender and Rural Development.

(a) For loans of $2 million or less, the maximum percentage of guarantee is 90 percent.

(b) For loans over $2 million but not over $5 million, the maximum percentage of guarantee is 80 percent.

(c) For loans in excess of $5 million, the maximum percentage of guarantee is 70 percent.

(d) Lenders and borrowers will propose the percentage of guarantee. Rural Development informs lenders and borrowers in writing on Form RD 449-14 of any percentage of guarantee less than proposed by the lender and borrower, and the reasons therefore. Rural Development determines the percentage of guarantee after considering all credit factors involved, including but not limited to:

(1) Borrower's management. The borrower's management, and when appropriate, equity capital, history of operation, marketing plan, raw material requirements, and availability of necessary supporting utilities and services;

(2) Collateral. Collateral for the loan;

(3) Financial condition. Financial condition of borrower or borrower's principals, if appropriate;

(4) Lender's exposure. The lender's exposure before and after the loan, and any applicable limits on the lender's lending authority; and

(5) Trends and conditions. Current trends and economic conditions.

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