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opment on behalf of low-income rural residents.

(b) Financial proposals. (1) A full description of the proposed use of the requested financial assistance, whether it is a business facility or community development project, and how increased income, ownership or employment opportunities for low-income area residents will be provided. In order to assure CSA that there is reasonable assurance of repayment of the loan and that the amount of the loan, together with other funds available, is adequate to assure completion of the project or achievement of the purposes for which the loan is being made, this description also should be accompanied by:

(i) A summary statement detailing the total cost of the project, delineating fixed assets and working capital, and explaining what other funds may be available or committed;

(ii) Detailed and realistic feasibility studies and cost analyses;

(iii) Audited financial statements for the immediately preceding three years or from the commencement of its operation, whichever period is shorter, and if funds will be used for the acquisition, preservation or expansion of an existing business, similar audited financial statements for such venture;

(iv) Cash-flow projections and pro forma financial statements and balance sheets estimated for three years, with the cash flow projections on a monthly basis and (pro forma) financial statement on a yearly basis;

(v) Estimated purchase price for any proposed purchase of real property, accompanied by an independent appraisal of the property establishing that the proposed purchase price is reasonable;

(vi) A statement detailing what other conventional private sources or Federal, state or local programs have resources available, and why those resources are not being utilized for the proposed project.

(c) Additional requirements for relending or guarantying. If the assistance being requested is for relending or guarantying funds to other eligible recipients, applicants must also submit the information required by the next section.

$1076.50-10 Loans and guaranties made by recipients to other eligible organizations.

(a) Where the purpose of the financial assistance awarded by CSA to an organization is for relending or guarantying, the recipient, in addition to submitting the eligibility documents for itself, must submit its work program for such relending and guarantying activities. The work program must contain:

(1) Standards and criteria for relending and guarantying, including determinations of rates of interest, fees, terms, repayment schedules, collateral security, default and collection procedures and how the same may be adjusted.

(2) Basis for determining any priorities or preferences in awarding assist

ance.

(3) A plan for providing loan servicing including technical assistance, evaluation, and monitoring.

(b) When an applicant plans to relend or guaranty to low-income families or profit-making businesses, it must also show how such activity will contribute to community economic development and directly benefit rural residents.

(c) Applications to recipients with approved work programs for relending or guarantying under this subpart may be made at any time. CSA's Office of Economic Development will periodically publish in the FEDERAL REGISTER the names and addresses and amounts available from those organizations which CSA already has funded.

(d) Notice of availability of loans and guaranties from recipients with approved work programs shall be given the widest possible publicity among potential eligible applicants. Such recipients, however, may utilize RFPs to limit the number and diversity of applications by subject matter areas and amounts with the express written consent of CSA. RFPs, where used, generally should state total funds to be made available thereunder and approximate number or size of the expected awards.

§ 1076.50-11 Security.

(a) As a Credit Factor. The availability of collateral security normally shall be considered as an important factor in making loans or guaranties. The types and amount of collateral security required should be governed by the relative strengths and weaknesses of other credit factors. However, the taking of collateral as security should be considered in each loan making or guaranty transaction. Collateral security should be sufficient to provide the lender reasonable protection from loss in the case of adversity, but such security or lack thereof should not be used

as

the primary basis for deciding whether to extend credit. Endorsements or guaranties by other organizations, directors, or persons should be used only in unusual cases.

(b) Security interests. Security interests which may be taken by the lender or guarantor include but are not limited to liens on real or personal property, including leasehold interests, assignments of income and accounts receivable, and liens on inventory of proceeds of inventory sales, as well as marketable securities and cash collateral accounts.

(c) Motor vehicles. Liens ordinarily should be taken on licenses motor vehicles or boats purchased hereunder in order to be able to transfer title easily should the lender need to declare a default or repossess the property.

(d) Additional security. The lender or guarantor may require collateral security or additional security at any time during the term of a loan or guaranty if after review and monitoring an assessment indicates the need for such security.

(e) Insurance on property secured. Ordinarily, hazard insurance up to the amount of the loan or the depreciated replacement value of the property secured (whichever is less) will be taken naming the lendor as beneficiary. Such insurance includes fire and extended coverage, public liability, property damage, and other appropriate types of hazard insurance.

(f) Appraisals. Property serving as collateral security will be appraised by a qualified appraiser.

§ 1076.50-12 Post award requirements.

(a) Applicability of CSA policies. Financial assistance to recipients with approved work programs for relending or guarantying is subject to the conditions established in the loan agreement with CSA.

(b) Deposits. (1) Unless other wise specifically agreed to in writing by CSA, loan proceeds and any interest thereon not immediately needed or disbursed by the borrower should be deposited in an interest bearing account or time deposit in a bank or other financial institution which can be fully covered by a form of federal deposit insurance.

(2) Deposits and accounts in financial institutions owned or controlled by minorities shall be encouraged provided they are adequately covered by a form of federal deposit insurance.

(3) Any interest or other income earned as a result of such accounts or deposits shall be used by the borrower only for the authorized purposes of the loan involved of its approved work program.

§ 1076.50-13 Liquidation; default.

Should the Director determine that it is necessary of desirable to take action to protect or further the interests of CSA in connection with any default or breach of conditions under any loan or guaranty made hereunder, the Director may:

(a) Declare that the loan is immediately due and payable.

(b) Assign or sell at public or private sale, or otherwise dispose of for cash or credit, in his/her discretion and upon such terms and conditions as he/ she shall determine to be reasonable, any evidence of debt, contract, claim, personal or real property, or security assigned to or held by the Director in connection with financial assistance extended hereunder.

(c) Adjust interest rates, use fixed or variable rates, grant moratoriums on repayment of principal and interest, collect or compromise any obligations held by him/her and take such other actions in respect to such loans and guaranties as are necessary or appropriate, consistent with the objections of the Program and this subpart.

(d) In taking the actions provided for in paragraph (c) above the Director shall take into account such factors as:

(1) The inherent difficulty of creating or expanding rural enterprises which can offer real and increased ownership, employment and income opportunities for low-income persons.

(2) The need for new and more responsive national, regional and local financial institutions to serve lowincome rural residents.

(3) The lead time, mobilization of resources, and leveraging required for rural residents to successfully pool their talents and abilities to engage in meaningful community economic development.

(4) The need for adequate technical assistance, training and skills development to accompany financial assistance for community-based, economic development efforts.

(5) The experimental and demonstrational nature of the program balanced with the desire to operate the program on a sound business basis. (6) Other particular needs of the borrower.

§ 1076.50-14 Conflict of interest.

No recipient shall relend or guaranty to or for the benefit of:

(a) Any person who is also a board member of such recipient without specific prior CSA written approval given with knowledge of the relationship involved; or

(b) Any organization which has on its governing board or as agent, consultant or employee, a person who is also a board member of the recipient without specific prior CSA written approval given with knowledge of the relationship involved.

CHAPTER XI-NATIONAL FOUNDATION ON THE ARTS AND THE HUMANITIES

SUBCHAPTER A-GENERAL

Part

Page

1100

Statement for the guidance of the public-organi-
zation, procedure and availability of informa-
tion........

500

1105

Standards of conduct of employees.....

504

1110

512

524

Nondiscrimination in Federally assisted programs.

1115 Privacy Act regulations.

1150

1151

SUBCHAPTER B-NATIONAL ENDOWMENT FOR THE ARTS

Collection of claims under the Federal Claims
Collection Act of 1966

Nondiscrimination on the basis of handicap............

1160

SUBCHAPTER C-FEDERAL COUNCIL ON THE ARTS AND THE

528

530

HUMANITIES

........

Indemnities under the Arts and Artifacts Indem-
nity Act

539

SUBCHAPTER D-NATIONAL ENDOWMENT FOR THE HUMANITIES

1170

1176

Nondiscrimination on the basis of handicap in
federally assisted programs and activities.
Part-time career employment.....

543

555

SUBCHAPTER A-GENERAL

PART 1100-STATEMENT FOR THE GUIDANCE OF THE PUBLIC-ORGANIZATION, PROCEDURE AND AVAILABILITY OF INFORMATION

Sec.

1100.1 Organization.

[blocks in formation]

is

(a) The National Foundation on the Arts and the Humanities was established by the National Foundation on the Arts and the Humanities Act of 1965 (79 Stat. 845; 20 U.S.C. 951). The Foundation is composed of a National Endowment for the Arts, a National Endowment for the Humanities, and a Federal Council on the Arts and the Humanities. Each Endowment headed by a Chairman and has a National Council composed of 26 Presidential appointees, with the Chairman of the Endowment also serving as Chairman of the Council. The purpose of the Foundation is to develop and promote a broadly conceived national policy of support for the humanities and the arts in the United States.

(b) The Endowments accomplish their missions primarily by providing financial assistance for projects in the arts and the humanities, including the making of fellowship and other awards to individuals as well as awards to nonprofit organizations. By statute, awards made to organizations by the National Endowment for the Arts may not exceed one-half the cost of the project, except that a percentage of the Arts Endowment's funds may be

used for nonmatching grants to organizations which show that they have attempted unsuccessfully to secure funds equal to the amounts applied for.

(c) The organizational arrangement of the Foundation is as follows:

a

(1) National Endowment for the Arts-(i) Office of the Chairman. The Endowment is headed by the Chairman, who is also Chairman of the National Council on the Arts and member of the Federal Council on the Arts and the Humanities. The Chairman, with the advice of the National Council on the Arts and the Federal Council on the Arts and the Humanities, is responsible for establishing Endownment policies and for developing and carrying out programs to provide support for projects and productions in the arts. The Chairman is assisted by two Deputy Chairmen, who are appointed by him. They are the Deputy Chairman for Policy and Planning and the Deputy Chairman for Programs.

(ii) Program Activities of the Arts Endowment. The activities of the Endowment are carried out with the aid of the following program offices: (A) Architecture, Planning Design

(B) Dance

(C) Education

(D) Expansion Arts

(E) Federal State Partnership (F) Folk Arts

(G) Literature
(H) Media Arts
(I) Museums
(J) Music

(K) Special Projects
(L) Theatre

(M) Visual Arts

and

Each of the above offices assists the Chairman in developing programs to provide support for activities in its area of interest.

(2) National Endowment for the Hu manities—(i) Office of the Chairman. The Endowment is headed by the Chairman, who is also Chairman of the National Council on the Humanities and a member of the Federal Council on the Arts and the Human

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