§2007c. Establishment of investment fund
(a) Establishment
(1) In general
There is established in the Treasury of the United States a fund for the use of the Board in carrying out the provisions of sections 2007a to 2007e of this title, that shall be known as the "Rural Business Investment Fund".
(2) Availability
The Rural Business Investment Fund shall be available to the Board to provide lines of credit for revolving funds to be operated by approved eligible entities to serve local businesses in rural areas.
(b) Use
(1) Lines of credit
Amounts in the Rural Business Investment Fund shall be used by the Board to provide lines of credit in amounts determined appropriate by the Board, but in no event shall any such line of credit exceed $750,000 annually (up to a total amount of $2,250,000) to an approved eligible entity. Each line of credit shall be made available over a period of time established by the Board for each such entity, but in no event shall any such period of time extend beyond the date on which the Investment Board is terminated under section 2007d(n) of this title.
(2) Exception
Notwithstanding paragraph (1), if the approved eligible entity is the agency of any State that is primarily responsible for the rural economic development programs within such State, the Board may provide a line of credit to such agency in an amount that shall not exceed $1,250,000 annually (up to a total amount of $3,750,000) in the manner described in paragraph (1).
(3) Amounts drawn from line
Amounts drawn from each line of credit by each approved eligible entity shall be used solely as provided under sections 2007a to 2007e of this title and shall be drawn only as needed to provide loans, investments, or to carry out a guarantee.
(c) Applications of eligible entities for lines of credit
(1) Federal Register notices
The Board shall publish notices of solicitations for applications for lines of credit in the Federal Register and such notices shall contain-
(A) the application procedures established by the Board;
(B) the application requirements of paragraph (3);
(C) the deadlines for submission of applications (which shall be not less than 150 days after the publication of the applicable notice);
(D) a copy of all available response forms;
(E) a summary of the functions of the Board regarding applications; and
(F) other information determined appropriate by the Board.
(2) Submission and consideration
An eligible entity that desires to receive a line of credit under sections 2007a to 2007e of this title shall submit an application to the Board at such time, in such form, and containing such information and documentation, including a description of the areas to be served, as the Board shall prescribe under paragraph (1), and the Board shall consider each such application based on the requirements of sections 2007a to 2007e of this title.
(3) Eligible entity
(A) Matching funds or letters of intent
In order for an application to be considered for approval by the Board for a line of credit, each eligible entity that submits an application shall-
(i) certify in writing that the entity shall use such funds as part of a revolving fund to invest in, and make or guarantee loans to, local businesses in accordance with sections 2007a to 2007e of this title; and
(ii)(I) agree to provide matching funds (Federal funds shall not be used to satisfy such matching requirement) in amounts that are at least equal to the amount of the line of credit to be provided by the Board, that shall be in the form of-
(aa) cash or cash equivalents; or
(bb) letters of credit in favor of the eligible entity issued or submitted by depository institutions (as defined in section 1813(c)(1) of title 12), insurance companies, similar Federally regulated financial institutions, State owned banks, local or State government or private philanthrophic1 foundations, as determined appropriate and acceptable by the Board; or
(II) demonstrate, through procedures determined appropriate and acceptable by the Board, that depository institutions (as so defined) or community development credit unions described in section 2007b(a) of this title, are prepared to participate with the eligible entity in a loan, guarantee, or investment program for the benefit of local businesses, and that the total financial commitment demonstrated by the letters of intent or other documents is at least equal to the value of the line of credit for which the eligible entity is applying.
(B) Exception for certain eligible entities
(i) Low per capita income areas
If the average per capita income level of the identified rural areas served by an eligible entity is less than 70 percent of the national average per capita income for the most recent year for which such information is available, such eligible entity shall only be required to match 50 percent of the funds provided by the Board in the same manner as described in subclause (I) or (II) of subparagraph (A)(ii). A list of the average per capita income and population of each county in the United States that contains rural areas, and the national average per capita income for such year, shall be published in the Federal Register and otherwise made available by the Board to the public.
(ii) Indian tribal council participation
(I) In general
Community or tribal development corporations operated by Federally recognized tribal councils that desire to administer a local revolving fund may participate in the program established under sections 2007a to 2007e of this title if such corporations meet the rules and procedures established under sections 2007a to 2007e of this title that are determined by the Board to be pertinent.
(II) Establishment of special rules and procedures
(aa) In general
Not later than 220 days after November 28, 1990, the Board shall establish rules and procedures to enable such community or tribal development corporations serving rural areas located on Federally recognized reservations (including former reservations in Oklahoma) to participate in the program established under sections 2007a to 2007e of this title through the operation of revolving funds used for investing in, and making or guaranteeing loans to, new or expanding local businesses.
(bb) Contents
Rules and procedures established under item (aa) shall be established to ensure that development corporations that receive Federal lines of credit under sections 2007a to 2007e of this title serve needy reservation areas, including areas that have low per capita income, high unemployment, high poverty rates, depressed or lagging local economies, and other factors determined appropriate by the Board.
(III) Matching requirements
The requirements of subsection (c)(3) of this section and section 2007d(d) of this title concerning the provision of matching funds and the requirement of partnerships for loans, and any related matching requirements, shall not apply to the development corporations receiving assistance under this clause.
(4) Reapplication for lines of credit
(A) In general
An eligible entity that has received a line of credit under this section may reapply in subsequent years for additional lines of credit if the Board makes a determination that-
(i) the applicant has demonstrated that the funds previously allocated under such line of credit have been substantially obligated and that additional demand for lending, investment, or guaranteed funding exists in the service area of the applicant;
(ii) the applicant will meet the matching requirements under subsection (c)(3) of this section; and
(iii) the applicant has administered the revolving fund consistent with sections 2007a to 2007e of this title and has the capacity to administer additional funds in the same manner.
(B) Priority
Eligible entities qualified to receive an initial line of credit or that will serve a service area not served by another entity shall receive priority over any applicant seeking a second or subsequent line of credit.
(5) Monitoring compliance
The Board shall establish procedures to monitor the compliance of each eligible entity participating in the program authorized by sections 2007a to 2007e of this title with the requirements of sections 2007a to 2007e of this title.
(6) Eligible entity revolving fund requirement
To be eligible to receive a line of credit from the Rural Business Investment Fund, the applicant eligible entity shall-
(A) demonstrate its ability or potential capacity to make sound business, lending, and investment decisions and to provide business counseling and technical assistance;
(B) demonstrate its ability to operate consistent with the requirements of sections 2007a to 2007e of this title and to increase the availability of credit in rural areas to promote the creation or expansion of viable businesses in rural areas;
(C) identify the proposed service area and define a strategy for serving that area that should describe such characteristics as similar industrial, labor, or other markets, similar geographic or socioeconomic conditions, or other related considerations, and, to the extent that such area includes any towns or townships, make a commitment to serve such towns or townships in their entirety;
(D) provide an assurance that its service area will consist of-
(i) all rural areas in a county if the median household income of the county is less than the Statewide nonmetropolitan median household income; or
(ii) identified rural areas in a county if-
(I) the median household income of the county is not less than the Statewide nonmetropolitan median household income; and
(II) the median household income of each rural city, town, or township to be served, and of each separate contiguous rural area to be served, is less than the Statewide nonmetropolitan median household income;
(iii) identified rural areas in a State in which the average per capita income is less than 70 percent of the nationwide per capita income; or
(iv) any county where the net migration population loss is at least 5 percent or greater from April 1, 1980, to July 1, 1987, as reported by the Census Bureau of the Department of Commerce; and
(E) provide a notification that an application has been filed with the Board to each county or other local unit of government having jurisdiction over some or all of the proposed service area under procedures developed by the Board.
(7) Factors in approval of applications
In determining which applications to approve, and the maximum amount of funds to be offered in each line of credit, the Board shall grant a preference to eligible entities-
(A) that have experience in serving local credit or equity needs and in making sound business and investment decisions, or that have the ability to serve such needs and make such decisions;
(B) whose boards of directors (or governing bodies if no such board exists) are composed of a cross-section of individuals (such as individuals with backgrounds in business, community development, or regional development, individuals who are State, local, or county government officials, or individuals involved in banking, financial, or other investment activities);
(C) that are likely to stimulate significant job creation or retention and new business creation or business expansion per dollar of funds provided under this section;
(D) that submit applications that demonstrate the ability and willingness to provide to local businesses continuing technical and management assistance, training, financial and business guidance, and planning;
(E) that demonstrate that the activities of the eligible entity are consistent with State, county, or local goals, whichever is applicable, regarding long-term economic growth and community development;
(F) that submit applications containing a comprehensive investment strategy, developed in consultation with the applicable State, regional council or government, and county or other general purpose unit of local government; and
(G) that propose to serve a service area-
(i) whose unemployment or poverty rates exceed the Statewide nonmetropolitan average;
(ii) with special needs arising from actual or threatened severe unemployment arising from economic dislocation; or
(iii) that includes any county in which the net migration population loss is at least 5 percent or greater from April 1, 1980, to July 1, 1987, as reported by the Census Bureau of the Department of Commerce.
(8) Geographic spread
(A) In general
In awarding lines of credit under this section the Board shall attempt, as much as reasonably practicable and consistent with sound financial judgment, to assure that all rural regions of the United States benefit from such awards.
(B) Minimum amount of funds
After considering the availability of qualified applications, and if consistent with good investment practices and the other requirements of sections 2007a to 2007e of this title, the Board shall approve the application of at least one eligible entity in each State selected under section 2007(b)(1) of this title. The Board shall, to the maximum extent practicable and appropriate, ensure that eligible entities that are approved by the Board in any given State receive at least $750,000 (per State) out of the funds provided under subsection (d) of this section. In addition, to the maximum extent practicable the Board shall approve the applications of at least two eligible entities in each State containing an approved eligible entity.
(C) Maximum amount of funds
The total amount of funds provided under sections 2007a to 2007e of this title to eligible entities in any State shall not exceed $10,000,000.
(D) Special program
(i) In general
The Board shall issue regulations to establish a program that targets the benefits of the Federal lines of credit provided under this section to those rural areas and residents with special needs.
(ii) Limits
If consistent with sound investment practices, not less than 5 percent, nor more than 15 percent, of the funds appropriated under subsection (d) of this section shall be issued to eligible entities that will serve-
(I) local businesses located in very distressed rural areas, as defined by the Board, that may include areas with special needs arising from actual or threatened severe unemployment which results from economic dislocation; and
(II) local businesses that provide beneficial services to rural residents such as improved medical, hospital, or health care, licensed day care facilities or centers, improved services for the handicapped, the disabled, the elderly or other needy individuals, improved educational opportunities, improved public transportation services for needy individuals, or other related services as determined appropriate by the Board.
(d) Limitation on authorization of appropriations
To carry out sections 2007a to 2007e of this title, there are authorized to be appropriated to the Rural Fund and the Board $10,000,000 for fiscal year 1992, $8,600,000 for fiscal year 1993, $6,700,000 for fiscal year 1994, and $4,700,000 for each of fiscal years 1995 and 1996. Amounts appropriated under this subsection shall remain available until expended or until the Board is terminated.
(e) Relocation and refinancing
The Board shall establish rules and procedures to prohibit eligible entities from using the assistance received under sections 2007a to 2007e of this title for loans and investments, or for issuing guarantees, that would-
(1) facilitate the relocation of a local business from one community to another;
(2) refinance the existing debt of a local business, except that such refinancing may be undertaken with such assistance if it is undertaken in conjunction with a substantial expansion effort by the local business; or
(3) significantly reduce the viability of a then existing business engaged in substantially the same business activities in the same community.
(Pub. L. 101 624, title XXIII, §2313, Nov. 28, 1990,
Codification
Section was enacted as part of the Rural Economic Development Act of 1990, and also as part of the Food, Agriculture, Conservation, and Trade Act of 1990, and not as part of the Consolidated Farm and Rural Development Act which comprises this chapter.
Amendments
1991-Subsec. (a)(2). Pub. L. 102 237, §702(c)(1), substituted "Rural Business Investment Fund" for "Fund established under paragraph (1)".
Subsec. (b)(1). Pub. L. 102 237, §702(c)(2), substituted "Rural Business Investment Fund" for "fund established by subsection (a)".
Subsec. (c)(6). Pub. L. 102 237, §702(c)(3), inserted "Business Investment" before "Fund" in introductory provisions.
Effective Date of 1991 Amendment
Amendment by Pub. L. 102 237 effective as if included in the provision of the Food, Agriculture, Conservation, and Trade Act of 1990, Pub. L. 101 624, to which the amendment relates, see section 1101(b)(7) of Pub. L. 102 237, set out as a note under section 1421 of this title.
Effective Date
Section effective Oct. 1, 1991, see section 2007(d) of this title.
Section Referred to in Other Sections
This section is referred to in sections 2007, 2007a, 2007b, 2007d, 2007e of this title.