Rural Utilities Service, USDA § 1779.34

(2) The guarantee fee rates are avail- Loan Note Guarantee must be approved able in any Agency office. by the Agency. Approval of such change will be shown as an amendment § 1779.30 Loan guarantee limitations. to the Conditional Commitment for (a) The guarantee will be 90 percent Guarantee. of eligible loss. (d) Different rates on guaranteed and (b) The lender will retain a minimum unguaranteed portion of the loan. It is of 5 percent of the total loan amount. permissible to have one interest rate The retained amount must be from the on the guaranteed portion of the loan unguaranteed portion of the loan and and another interest rate on the cannot be participated to another lend- unguaranteed portion of the loan, pro- er. vided the lender and borrower agree, and: §§ 1779.31–1779.32 [Reserved] (1) The rate on the unguaranteed por- § 1779.33 Interest rates. tion does not exceed that currently being charged on loans for similar pur- (a) General. Rates will be negotiated poses to borrowers under similar cir- between the lender and the borrower. cumstances; and They may be either fixed or variable (2) The rate on the guaranteed por- rates. Interest rates will be those rates tion of the loan will not exceed the customarily charged borrowers in simi- rate on the unguaranteed portion. This lar circumstances in the ordinary requirement does not apply when the course of business and are subject to unguaranteed rate is variable and the Agency review and approval. guaranteed portion is fixed. (b) Variable rate publication. A vari- able interest rate must be tied to a (e) Multi-rates. When multi-rates are base rate published periodically in a used, the lender will provide the Agen- recognized national or regional finan- cy with the overall effective interest cial publication specifically agreed to rate for the entire loan. Multi-rate by the lender and borrower. Such an loans may be either fixed, variable, or agreement must be documented in the a combination of fixed and variable. borrower or lender loan agreement. § 1779.34 Terms of loan repayment. (1) Interest rate caps and incremental adjustment limitations will also be ne- (a) General. Principal and interest on gotiated between the lender and the the loan will be due and payable as pro- borrower. Notice of any interest rate vided in the note except, any interest change proposed by the lender should accrued as the result of the borrower’s allow a sufficient time period for the default on the guaranteed loan over borrower to obtain any required State and above that which would have ac- or other regulatory approval and to im- crued at the note rate on the guaran- plement any user rate adjustments teed loan will not be guaranteed by the necessary as a result of the interest Agency. The lender will structure re- rate change. The intervals between in- payments as established in the loan terest rate adjustments will be speci- agreement between the lender and bor- fied in the loan agreement (but not rower. Ordinarily, such installments more often than quarterly). will be scheduled for payment as (2) The lender must incorporate with- agreed upon by the lender and borrower in the variable rate note, the provision on terms that reasonably ensure repay- for adjustment of payments coincident ment of the loan. However, the first in- with an interest rate adjustment. This stallment to include a repayment of will ensure the outstanding principal principal may be scheduled for pay- balance is properly amortized within ment after the project is operable and the prescribed loan maturity and has begun to generate income. Such in- eliminate the possibility of a balloon stallment must be due and payable payment at the end of the loan. within 3 years from the date of the (c) Changes. Any change in the inter- note and at least annually thereafter. est rate between the date of issuance of Interest will be due at least annually the Conditional Commitment for Guar- from the date of the note. Monthly antee and before the issuance of the payments will be required except for

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