§2009g Guarantee and Commitment to Guarantee Loans

Summary

The Secretary may promise to guarantee loans, notes, or other debt that local governments (called “eligible public entities”) or public agencies they pick issue to pay for rural development projects funded under section 2009f. The Secretary sets the rules for those guarantees. A State’s total outstanding guaranteed debt from this program cannot be more than 5 times the total grants that State received under section 2009f, not counting amounts already repaid under an approved repayment contract. States can use their grants and program income to pay principal, interest, and certain fees on guaranteed debt. To get a guarantee, an issuer must sign a repayment contract the Secretary approves, pledge any grants they may get under the program, and give any other security the Secretary requires. States must also pledge their grants as security for debt issued in the State. The Secretary can apply pledged grants to pay what is owed to the United States. Guarantees overall cannot exceed the amount Congress has authorized for the program each fiscal year. The Federal Financing Bank may not buy these obligations. The United States fully backs the guarantees, and a guarantee is final and cannot be challenged by a holder of the guaranteed debt.