United States Department of Agriculture
Farmers Home Administration
Community Programs (CP) Guaranteed Loans

The Farmers Home Administration (FmHA) is authorized to guarantee loans made by eligible lenders to borrowers in rural areas and in towns of up to 10,000 for developing water and waste disposal facilities or 20,000 for developing other essential community facilities.

Water and Waste Disposal includes facilities for:

• Water treatment and distribution
• Sewage collection and treatment
• Solid waste collection and disposal
• Storm drainage

"Other Essential Community Facilities" include facilities such as:

• Public safety facilities, including:

Fire department buildings
Fire apparatus and equipment
Rescue squad buildings
Ambulances and equipment
Police stations and/or jails
Communications centers
Multi-service centers

• Health Care Facilities including:

Hospitals and equipment
Nursing homes and equipment
Medical or dental clinics
Medical rehabilitation centers

• Public Service Facilities, including:

Community buildings
Courthouses
Libraries
Schools
Industrial parks
Roads and/or bridges
Airports
Fairgrounds
Utilities

What is an eligible lender?

Eligible lenders are those lenders who are subject to credit examination by either a Federal or State Agency. These may include:

• A bank or saving and loan
• A mortgage company that is part of a bank holding company
• A farm credit bank of the Federal Land Bank Association
• An insurance company regulated by the National Association of insurance commissioners
• Others as approved by the FmHA Administrator

What is an eligible borrower?

Those borrowing funds under this program must be a public entity such as: a municipality, county, or special purpose district, or may be a nonprofit corporation or an Indian tribe. The borrower must have the legal authority to borrow and repay the loan and meet all the requirements of the loan. Applicants for the loan must be unable to obtain the loan from private or cooperative without the guarantee, at reasonable rates and terms.

How may funds be used?

Funds guaranteed under this program may be used to construct, enlarge, or otherwise improve water and waste disposal and other essential community facilities. This can include costs to acquire interest in lands, leases, and rights-of-way necessary to develop the facility. Funds can also be used for necessary equipment for the operation of the facility.

What is the Guarantee?

FmHA may guarantee up to 90 percent of loss of principal and interest on a loan. Normally guarantees

Page 20 / Illinois Municipal Review / July 1990

will not exceed 80 percent unless extraordinary circumstances exist.

What purposes are ineligible?

Guarantees can not be issued for:

• Projects involving tax-exempt notes or bonds
• Projects involving an FmHA Water and Waste Disposal Grant
• Loans made by Federal or State Agencies
• On-site utility systems or business and industrial buildings in connection with an industrial site
• Facilities primarily for recreational purposes
• Community antenna services or facilities
• Certain electrical generation, transmission, or telephone systems
• Facilities that are not modest in size, design, or cost
• Loan finders fees
• New combined sanitary and storm water sewer facilities
• Projects located within the Coastal Barriers Resource System that do not qualify for an exception

How do I find out more and make application?

Any FmHA Office can give basic information about the CP Guaranteed loan program, but applications should be made at the FmHA District Office. The District Office staff will be glad to discuss services available from the Agency and explain how to prepare a written application.

FmHA Office locations can usually be found in the telephone directory under "U.S. Government, Department of Agriculture". FmHA District Offices in Illinois are located in Princeton, Morris, Galesburg, Jacksonville, Champaign, Flora, Nashville and Harrisburg. The FmHA State Office is located at 1817 S. Neil St., Suite 103, Champaign, IL 61820 (telephone 217-398-5247). •

News items and photographs of interest indicating new developments and progress in your municipality are always of interest to our readers. You are urged to send such information to the ILLINOIS MUNICIPAL REVIEW for publication. Be sure your information is complete. All photographs should be black and white glossy prints. —Editor

July 1990 / Illinois Municipal Review / Page 21