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Notice

Guarantee Fee Rates for Guaranteed Loans for Fiscal Year 2007; Maximum Portion of Guarantee Authority Available for Fiscal Year 2007

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AGENCY:

Rural Business-Cooperative Service, USDA.

ACTION:

Notice.

SUMMARY:

As set forth in 7 CFR 4279.107(b) and 4280.126(c), Rural Development (the Agency) has the authority to charge an annual renewal fee for loans made under the Business and Industry (B&I) Guaranteed Loan Program and the Renewable Energy and Energy Efficiency Improvements (9006) Guaranteed Loan Program. Pursuant to that authority, the Agency is establishing the renewal fee rate at one-fourth of 1 percent for the B&I Guaranteed Loan Program and one-eighth of 1 percent for the 9006 Guaranteed Loan Program. These rates will apply to all loans obligated in fiscal year (FY) 2007 that are made under the cited programs. As established in 7 CFR 4279.107 and 4280.126, the amount of the fee on each guaranteed loan will be determined by multiplying the fee rate by the outstanding principal loan balance as of December 31, multiplied by the percent of guarantee.

As set forth in 7 CFR 4280.126(a), each fiscal year the Agency shall establish the initial guarantee fee rate for loans made under the 9006 Guaranteed Loan Program. Pursuant to that authority, the Agency is establishing the initial guarantee fee rate at 1 percent for loans made in FY 2007.

As set forth in 7 CFR 4279.107(a) and 4279.119(b)(4), each fiscal year the Agency shall establish a limit on the maximum portion of B&I guarantee authority available for that fiscal year that may be used to guarantee loans with a B&I guarantee fee of 1 percent or guaranteed loans with a guarantee percentage exceeding 80 percent.

Allowing the guarantee fee to be reduced to 1 percent or exceeding the 80 percent guarantee on certain B&I guaranteed loans that meet the conditions set forth in 7 CFR 4279.107 and 4279.119 will increase the Agency's ability to focus guarantee assistance on projects which the Agency has found particularly meritorious. For 1 percent fees, the borrower's business supports value-added agriculture and results in farmers benefiting financially, or such projects are high impact as defined in 7 CFR 4279.155(b)(5) and located in rural communities that remain persistently poor, which experience long-term population decline and job deterioration, are experiencing trauma as a result of natural disaster, or are experiencing fundamental structural changes in its economic base. For guaranteed loans exceeding 80 percent, such projects must be a high-priority project in accordance with 7 CFR 4279.155.

Not more than 12 percent of the Agency's quarterly apportioned B&I guarantee authority will be reserved for loan requests with a guarantee fee of 1 percent, and not more than 15 percent of the Agency's quarterly apportioned guarantee authority will be reserved for guaranteed loan requests with a guaranteed percentage exceeding 80 percent. Once the respective quarterly limits are reached, all additional loans for that quarter will be at the standard fee and guarantee limits in 7 CFR part 4279. As an exception to this paragraph and for the purposes of this notice, loans developed by the North American Development Bank (NADBank) Community Adjustment and Investment Program (CAIP) will not count against the 15 percent limit. Up to 50 percent of CAIP loans may have a guaranteed percentage exceeding 80 percent. The funding authority for CAIP loans is not derived carryover or recovered funding authority of the B&I Guaranteed Loan Program.

Written requests by the Rural Development State Office for approval of a guaranteed loan with a 1 percent guarantee fee or a guaranteed loan exceeding 80 percent must be forwarded to the National Office, Attn: Director, Business and Industry Division, for review and consideration prior to obligation of the guaranteed loan. The Administrator will provide a written response to the State Office confirming approval or disapproval of the request.

EFFECTIVE DATE:

January 17, 2007.

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FOR FURTHER INFORMATION CONTACT:

Fred Kieferle, USDA, Rural Development, Business Programs, Business and Industry Division, Stop 3224, 1400 Independence Avenue, SW., Washington, DC 20250-3224, telephone (202) 720-7818.

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SUPPLEMENTARY INFORMATION:

This action has been reviewed and determined not to be a rule or regulation as defined in Executive Order 12866 as amended by Executive Order 13258.

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Dated: January 5, 2007.

Jackie J. Gleason,

Administrator, Rural Business-Cooperative Service.

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[FR Doc. E7-504 Filed 1-16-07; 8:45 am]

BILLING CODE 3410-XY-P