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

(a) The Secretary may make insured loans under this subchapter, at the stated rates, using all available fund assets, subject only to annual loan and advance limits Congress imposes; those amounts remain available until spent. Congress may authorize excess fund cash to be transferred to the Treasury as miscellaneous receipts. These loans and advances are excluded from the federal budget totals and general statutory limits on expenditures and net lending. (b) The Secretary insures loans when a lender buys them. An insured loan is made, held, and serviced by the Secretary and sold and insured by the Secretary, without undue delay. (c)(1)(A) The Secretary must make qualifying hardship electric loans at five percent interest. The applicant’s average revenue per kilowatt-hour and average residential revenue per kilowatt-hour must each be at least 120 percent of the state utility average, and the served residents’ average per-capita income or median household income must be below the state average. (B) The Secretary may also make a five-percent loan when, in the Secretary’s sole judgment, the applicant has suffered severe hardship. (C) Except under (D), the loan may not serve an urban consumer if the applicant’s total system has more than 17 consumers per line mile. (D) The Secretary must make five-percent loans to applicants whose residential revenue exceeds 15 cents per kilowatt-hour. A qualifying application to serve a consumer outside an urbanized area is exempt from (A) and (C). (2)(A) The Secretary must make qualifying municipal-rate electric loans at the rate in (B) for the term selected under (C). (B)(i) The rate is the Secretary-determined current market yield on comparable municipal obligations, capped at the section 1927(a)(3)(A) rate, plus the difference between commercial rates for loans with and without a prepayment right if the applicant elects that right under (D). (ii) The rate may not exceed seven percent when the system has fewer than 5.50 consumers per line mile, or when applicant average revenue exceeds the state average and served residents’ average per-capita or median household income is below the state level. (iii) That cap does not apply to an urban-area loan if the system exceeds 17 consumers per line mile. (C)(i) The applicant selects the rate term and may renew for another selected term. (ii)(I) The first and later terms may not end more than 35 years after the first term begins. (II) The Secretary may bar a term that would make the loan longer than the financed assets’ expected useful life. (D) The Secretary must offer a prepayment option on commercial-loan-consistent terms. (3) The Secretary may not require an applicant eligible under paragraph (1) to obtain other credit as a condition of approval or advance. (d)(1)(A) The Secretary must make qualifying five-percent hardship telephone loans when the service area has no more than four subscribers per line mile; the applicant’s net income or pre-interest margins cover at least 100 but no more than 300 percent of interest on outstanding and proposed loans; the Secretary has approved a state telecommunications modernization plan and, if borrowers developed it, the applicant participates; and the proposed area has no more than 17 subscribers per line mile. (B) The Secretary may waive the income or margin condition, stating reasons in writing, to prevent emergency restoration or severe hardship. (C) If funds are unavailable, an eligible applicant is treated as applying under subchapter IV. (2)(A) The Secretary may make cost-of-money telephone loans for rural service lines, systems, and facilities, excluding primarily administrative buildings, nonconstruction vehicles, and customer-premises equipment. The rate is the government’s current comparable loan cost, capped at seven percent. The applicant must have no more than 15 service-area subscribers per line mile or margins covering at least 100 but no more than 500 percent of interest, and must have an approved modernization plan and participate when required. (B) On request during a fiscal year, the Secretary treats the application as one under this paragraph and, if eligible, lends the same ratio of the total eligible amount as funds made available bear to total funds made available. (C) If funds are unavailable, an eligible applicant is treated as applying for a section 936 guarantee. (3)(A) Within one year after final regulations, a state may develop a qualifying modernization plan by statute or utility commission, which the Secretary must approve. If it does not, the Secretary must approve a qualifying plan developed by a majority of in-state telephone-loan borrowers. (B) At minimum, the plan must eliminate party lines; make telecommunications available for improved business, education, and medical services; improve rural computer networks and information highways; provide rural subscribers conference calling, video images, and at least one million bits per second through telephone lines, with proper routing; use uniform schedules so rural and nonrural advanced services deploy together; and meet additional service standards the Secretary requires. (C) Approval cannot later be withdrawn. Despite the plan conditions in (1)(A)(iii) and (2)(A)(iii), the Secretary may lend to a borrower in a state without an approved plan during the first year after final implementing regulations.