Title 7 — AgricultureRelease 119-73

§2009g Guarantee and commitment to guarantee loans

Title 7 › Chapter CHAPTER 50— - AGRICULTURAL CREDIT › Subchapter SUBCHAPTER V— - RURAL COMMUNITY ADVANCEMENT PROGRAM › § 2009g

Last updated Apr 6, 2026|Official source

Summary

The Secretary may agree to guarantee or actually guarantee loans and other debt that local governments or their public agencies issue to pay for rural development projects funded under section 2009f. Eligible public entity: any unit of general local government. The Secretary sets the terms. Guarantees for issuers in a State cannot be made if the total outstanding guaranteed debt in that State would be more than five times the total grants that State got under section 2009f, not counting amounts already repaid under the required repayment contract. All guarantees together can never exceed the amount Congress allows for the program in a fiscal year. The Federal Financing Bank may not buy these guaranteed notes. To get a guarantee, the issuer must sign a repayment contract the Secretary accepts, pledge any grants it could receive under this program, and provide any other security the Secretary requires. A State must also pledge its grants as security for local issuers in the State. The Secretary can use pledged grants to repay what is owed to the United States. The guarantees are backed by the full faith and credit of the United States and are final and incontestable for holders of the guaranteed obligations.

Full Legal Text

Title 7, §2009g

Agriculture — Source: USLM XML via OLRC

(a)In this section, the term “eligible public entity” means any unit of general local government.

(b)The Secretary, on such terms and conditions as the Secretary may prescribe, may guarantee and make commitments to guarantee notes or other obligations issued by eligible public entities, or by public agencies designated by the eligible public entities, for the purposes of financing rural development activities authorized and funded under section 2009f of this title.

(c)The Secretary may not make a guarantee or commitment to guarantee with respect to a note or other obligation if the total amount of outstanding notes or obligations guaranteed under this section (excluding any amount repaid under the contract entered into under subsection (e)(1)(A)) for issuers in the State would exceed an amount equal to 5 times the sum of the total amount of grants made to the State under section 2009f of this title.

(d)Notwithstanding any other provision of this subchapter, a State to which a grant is made under section 2009f of this title may use the grant (including program income derived from the grant) to pay principal and interest due (including such servicing, underwriting, or other costs as may be specified in regulations of the Secretary) on any note or other obligation guaranteed under this section.

(e)(1)To ensure the repayment of notes or other obligations and charges incurred under this section and as a condition for receiving the guarantees, the Secretary shall require the issuer to—

(A)enter into a contract, in a form acceptable to the Secretary, for repayment of notes or other obligations guaranteed under this section;

(B)pledge any grant for which the issuer may become eligible under this subchapter; and

(C)furnish, at the discretion of the Secretary, such other security as may be considered appropriate by the Secretary in making the guarantees.

(2)To assist in ensuring the repayment of notes or other obligations and charges incurred under this section, a State shall pledge any grant for which the State may become eligible under this subchapter as security for notes or other obligations and charges issued under this section by any eligible public entity in the State.

(f)Notwithstanding any other provision of this subchapter, the Secretary may apply grants pledged pursuant to paragraphs (1)(B) and (2) of subsection (e) to any repayments due the United States as a result of the guarantees.

(g)The total amount of outstanding obligations guaranteed on a cumulative basis by the Secretary pursuant to subsection (b) shall not at any time exceed such amount as may be authorized to be appropriated for such purpose for any fiscal year.

(h)Notes or other obligations guaranteed under this section may not be purchased by the Federal Financing Bank.

(i)The full faith and credit of the United States is pledged to the payment of all guarantees made under this section. Any such guarantee made by the Secretary shall be conclusive evidence of the eligibility of the obligations for the guarantee with respect to principal and interest. The validity of the guarantee shall be incontestable in the hands of a holder of the guaranteed obligations.

Reference

Citations & Metadata

Citation

7 U.S.C. § 2009g

Title 7 — Agriculture

Last Updated

Apr 6, 2026

Release point: 119-73