§3043 — Title 12 Banks and Banking | U.S. Code

Summary

The Office can give a capital investment advance to an eligible cooperative, with or without a loan, when the co-op can’t get enough capital from loans or other sources and either needs more startup or extra capital than it can borrow, or has mostly low-income members or plans to serve low-income people. The co-op must also have a plan to pay back the advance from member equity within no more than 30 years. The Office can also help pay some or all of the interest a qualifying co-op owes to the Bank or another lender if the co-op serves low-income people and cannot afford market interest. That help cannot be more than 4 percent of the loan principal for any year when the co-op’s net income can’t cover scheduled interest. All of these advances must carry interest set by the Bank’s Board of Directors, and the Board may set a lower rate than the Bank’s regular loans.

Title 12, §3043

Banks and Banking — Source: USLM XML via OLRC

(a)The Office may make a capital investment advance to any eligible cooperative, either in conjunction with or without a loan if the Office determines that—

(1)(A)the applicant’s initial or supplemental capital requirements exceeds its ability to obtain such capital through a loan under section 3018 of this title or from other sources; or

(B)the membership of the applicant is, or will consist, substantially of low-income persons, as defined by the Board of Directors, or the applicant proposes to undertake to provide specialized goods, services, or facilities to serve their needs; and

(2)the applicant cannot obtain sufficient funds through a loan under section 3018 of this title or otherwise, and the applicant presents a plan which the Office determines will permit the replacement of a capital investment advance out of member equities within a period not to exceed thirty years.

(b)The Office may make advances to pay all or part of the interest payable to the Bank or any other lender by an eligible cooperative applicant which the Office determines cannot pay a market rate of interest because it sells goods or services to, or provides facilities for the use of, persons of low income: Provided, That such advances will not exceed an amount equal to 4 per centum of the principal amount of the indebtedness of such applicant to the Bank or such other lender for any year in which the net income of the cooperative is insufficient to meet scheduled interest payments.

(c)Capital investment advances made by the Office pursuant to subsection (a) and interest supplement advances made by the Office pursuant to subsection (b) shall bear interest at a rate determined by the Board of Directors of the Bank, and the Board of Directors may authorize an interest rate applicable to such advances lower than the rate applicable to loans by the Bank pursuant to section 3018 of this title.

Notes & Related Subsidiaries

Editorial Notes

Amendments

1981—Subsecs. (a), (b). Pub. L. 97–35 struck out references to the Account wherever appearing.

Statutory Notes and Related Subsidiaries

Effective Date

of 1981 AmendmentAmendment by Pub. L. 97–35 effective on the day after the Final Government Equity Redemption Date (Dec. 31, 1981), see section 396(i) of Pub. L. 97–35, set out as a note under section 3011 of this title.

§3043 Advances