To provide a loan guarantee for the construction
or improvement of water and waste disposal projects serving the financially
needy communities in rural areas. This
purpose is achieved through bolstering the existing private credit structure
through the guarantee of quality loans that will provide lasting benefits. The water and waste disposal guarantee
loans are to serve a population not in excess of 10,000 in rural areas
Guaranteed loans are made and serviced by lenders
such as banks, savings and loan associations, mortgage companies and other
eligible lenders under the Guarantee Loan Program. These funds are available to
be used by public bodies, non-profit corporations and Indian tribes. To
qualify, applicants must be unable to obtain the required credit without the
loan guarantee from private, commercial or cooperative sources at reasonable
rates and terms. Each borrower must have or will obtain the legal authority
necessary to construct, operate and maintain the proposed facility and
services. The facilities must be located in a rural area. All facilities
financed under this provision shall be for public purposes. Guaranteed loans
may be made in combination with direct loans.
The lender will structure repayment as established
in the loan agreement between the lender and borrower. Normally, guarantees do
not exceed 80 percent of the loan. Interest rates are fixed or variable and are
determined by the lender and borrower subject to USDA Rural Development review
and approval. The maximum time allowable for final maturity for a guaranteed
Water and Waste Disposal loan will be limited to the useful life of the
facility, not to exceed 40 years. Balloon payments at the end of the loan are
prohibited.
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