Title 42, The Public Health and WelfareRelease 119-110

§291j–3 Applications and Conditions

Title 42 › CHAPTER 6A — PUBLIC HEALTH SERVICE › SUBCHAPTER IV — CONSTRUCTION AND MODERNIZATION OF HOSPITALS AND OTHER MEDICAL FACILITIES › Part B — Loan Guarantees and Loans for Modernization and Construction of Hospitals and Other Medical Facilities › § 291j–3

Last updated Sep 22, 2026|Official source

Summary

To get a federal loan guarantee for a nonprofit or a direct federal loan for a public agency, the nonprofit or public agency must send an application to the Secretary through the State agency. The application can be filed by one or more agencies working together. It must include the project plans and other information the Secretary requires, plus a State agency certification of the total project cost and the loan amount requested. The Secretary can approve an application only if the State has enough of its allotment left to cover the loan, the required approval findings are made (with a special rule about project priority that ignores two clauses), the project meets other legal requirements, the applicant promises to keep records and provide reports, and, for guaranteed loans, the loan terms protect the United States and are reasonable, including a reasonable interest rate based on market rates and risks. The State agency must be given a chance for a hearing before any denial. Changes to an approved application need the same approval. If the government pays on a guarantee to a nonprofit, it can recover that amount from the nonprofit unless waived, and then the government takes the lender’s rights. Guarantees can have extra conditions or be modified if consistent with the United States’ financial interest. A guarantee is final for a lender or holder unless the applicant or that person committed fraud or lied.

Full Legal Text

Title 42, §291j–3

The Public Health and Welfare, Source: USLM XML via OLRC

(a)Contents of applications

For each project for which a guarantee of a loan to a nonprofit private agency or a direct loan to a public agency is sought under this part, there shall be submitted to the Secretary, through the State agency designated in accordance with section 291d of this title, an application by such private nonprofit agency or by such public agency. If two or more private nonprofit agencies, or two or more public agencies, join in the project, the application may be filed by one or more such agencies. Such application shall (1) set forth all of the descriptions, plans, specifications, assurances, and information which are required by the third sentence of section 291e(a) of this title (other than clause (6) thereof) with respect to applications submitted under that section, (2) contain such other information as the Secretary may require to carry out the purposes of this part, and (3) include a certification by the State agency of the total cost of the project and the amount of the loan for which a guarantee is sought under this part, or the amount of the direct loan sought under this part, as the case may be.

(b)Conditions for approval

The Secretary may approve such application only if—

(1)there remains sufficient balance in the allotment determined for such State pursuant to section 291j–2 of this title to cover the amount of the loan for which a guarantee is sought, or the amount of the direct loan sought (as the case may be), in such application,

(2)he makes each of the findings which are required by clauses (1) through (4) of section 291e(b) of this title for the approval of applications for projects thereunder (except that, in the case of the finding required under such clause (4) of entitlement of a project to a priority established under section 291c(a) of this title; such finding shall be made without regard to the provisions of clauses (1) and (3) of such section),

(3)he finds that there is compliance with section 291e(e) of this title,

(4)he obtains assurances that the applicant will keep such records, and afford such access thereto, and make such reports, in such form and containing such information, as the Secretary may reasonably require, and

(5)he also determines, in the case of a loan for which a guarantee is sought, that the terms, conditions, maturity, security (if any), and schedule and amounts of repayments with respect to the loan are sufficient to protect the financial interests of the United States and are otherwise reasonable and in accord with regulations, including a determination that the rate of interest does not exceed such per centum per annum on the principal obligation outstanding as the Secretary determines to be reasonable, taking into account the range of interest rates prevailing in the private market for similar loans and the risks assumed by the United States.

(c)Hearing

No application under this section shall be disapproved until the Secretary has afforded the State agency an opportunity for a hearing.

(d)Amendment of approved applications

Amendment of an approved application shall be subject to approval in the same manner as an original application.

(e)Recovery rights; terms and conditions

(1)In the case of any loan to a nonprofit private agency, the United States shall be entitled to recover from the applicant the amount of any payments made pursuant to any guarantee of such loan under this part, unless the Secretary for good cause waives its right of recovery, and, upon making any such payment, the United States shall be subrogated to all of the rights of the recipient of the payments with respect to which the guarantee was made.

(2)Guarantees of loans to nonprofit private agencies under this part shall be subject to such further terms and conditions as the Secretary determines to be necessary to assure that the purposes of this part will be achieved, and, to the extent permitted by subsection (f), any of such terms and conditions may be modified by the Secretary to the extent he determines it to be consistent with the financial interest of the United States.

(f)Incontestable guarantee

Any guarantee of a loan to a nonprofit private agency made by the Secretary pursuant to this part shall be incontestable in the hands of an applicant on whose behalf such guarantee is made, and as to any person who makes or contracts to make a loan to such applicant in reliance thereon, except for fraud or misrepresentation on the part of such applicant or such other person.

Reference

Citations & Metadata

Citation

42 U.S.C. § 291j–3

Title 42, The Public Health and Welfare

Last Updated

Sep 22, 2026

Release point: 119-110