42 U.S.C. § 300e–4 — Loans and loan guarantees for initial operation costs

(a) Authority The Secretary may: (1) make loans to public or private HMOs to help cover the amount by which their operating costs exceed their revenues -- for a period of up to their first 60 months of operation; (2) make loans to help cover the amount by which operating costs the Secretary attributes to a significant membership or service-area expansion exceed the revenues attributable to that expansion, for up to 60 months after the expansion; and (3) guarantee non-federal lenders' repayment of principal and interest on loans made to private HMOs for the amounts described in (1) and (2). No loan or loan guarantee under this subsection may be made unless the Secretary determines the HMO made all reasonable attempts to cover these costs itself, and unless the Secretary already gave the HMO a grant, loan, contract, or loan guarantee in fiscal year 1981, 1982, 1983, 1984, or 1985 under this section or the prior version of section 300e-3(b) (as it existed before October 1, 1985). (b) Limitations (1) Except as paragraph (2) allows, the total principal of loans made or guaranteed under subsection (a) for any one HMO can't exceed $7,000,000. In any 12-month period, the amount disbursed to an HMO under this section -- whether directly, through an escrow agent, or through a guaranteed lender -- can't exceed $3,000,000. (2) The total outstanding principal of loans directly made or guaranteed under subsection (a), at any given time, can't exceed whatever limits appropriation acts set. (c) Source of loan funds Loans under this section come from the fund set up under section 300e-7(e). (d) Time limit on loans and loan guarantees No loan under this section may be made or guaranteed after September 30, 1986. (e) Repealed. (f) Medically underserved populations When reviewing loan-guarantee applications under this section, the Secretary must give special consideration to applications from HMOs that will serve medically underserved populations.