§ 936b. Sale or prepayment of direct or insured loans
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(a)Discounted prepayment by borrowers of electric loans
(1)In general Except as provided in paragraph (2), a direct or insured loan made under this chapter shall not be sold or prepaid at a value that is less than the outstanding principal balance on the loan.
(2)Exception On request of the borrower, an electric loan made under this chapter, or a portion of such a loan, that was advanced before May 1, 1992, or has been advanced for not less than 2 years, shall be sold to or prepaid by the borrower at the lesser of—
(A)the outstanding principal balance on the loan; or
(B)the present value of the loan discounted from the face value at maturity at the rate established by the Secretary.
(3)Discount rate The discount rate applicable to the prepayment under this subsection of a loan or loan advance shall be the then current cost of funds to the Department of the Treasury for obligations of comparable maturity to the remaining term of the loan.
(4)Tax exempt financing If a borrower prepays a loan under this subsection using tax exempt financing, the discount shall be adjusted to ensure that the borrower receives a benefit that is equal to the benefit the borrower would receive if the borrower used fully taxable financing. The borrower shall certify in writing whether the financing will be tax exempt and shall comply with such other terms and conditions as the Secretary may establish that are reasonable and necessary to carry out this subsection.
(5)Eligibility
(A)In general A borrower that has prepaid an insured or direct loan shall remain eligible for assistance under this chapter in the same manner as other borrowers, except that—
(i)a borrower that has prepaid a loan, either before or after October 21, 1992, at a discount rate as provided by paragraph (3), shall not be eligible, except at the discretion of the Secretary, to apply for or receive direct or insured loans under this chapter during the 120-month period beginning on the date of the prepayment; and
(ii)a borrower that prepaid a loan before October 21, 1992, at a discount rate greater than that provided by paragraph (3), shall not be eligible—
(I)except at the discretion of the Secretary, to apply for or receive direct or insured loans described in clause
(i)during the 180-month period beginning on the date of the prepayment; or
(II)to apply for or receive direct or insured loans described in clause
(i)until the borrower has repaid to the Federal Government the sum of—
(aa)the amount (if any) by which the discount the borrower received by reason of the prepayment exceeds the discount the borrower would have received had the discount been based on the cost of funds to the Department of the Treasury at the time of the prepayment; and
(bb)interest on the amount described in item (aa), for the period beginning on the date of the prepayment and ending on the date of the repayment, at a rate equal to the average annual cost of borrowing by the Department of the Treasury.
(B)Effect on existing agreements If a borrower and the Secretary have entered into an agreement with respect to a prepayment occurring before October 21, 1992, this paragraph shall supersede any provision in the agreement relating to the restoration of eligibility for loans under this chapter.
(C)Distribution borrowers A distribution borrower not in default on the repayment of loans made or insured under this chapter shall be eligible for discounted prepayment as provided in this subsection. For the purpose of determining eligibility for discounted prepayment under this subsection or eligibility for assistance under this chapter, a default by a borrower from which a distribution borrower purchases wholesale power shall not be considered a default by the distribution borrower.
(6)Definitions As used in this subsection:
(A)Direct loan The term “direct loan” means a loan made under section 904 of this title.
(B)Insured loan The term “insured loan” means a loan made under section 935 of this title.
(b)Mergers of electric borrowers Notwithstanding subsection (a), a direct or insured loan may be prepaid by an electric borrower at the lesser of the outstanding principal balance due thereon or the present value thereof discounted from the face value at maturity at the rate set by the Secretary if the borrower is an electrical organization which resulted from a merger or consolidation between a borrower and an organization which, prior to October 1, 1987, prepaid its direct or insured loans pursuant to this section. Prepayments by a borrower hereunder shall be made not later than one year after the effective date of the merger, consolidation, or other transaction. The discount rate to be set by the Secretary for direct or insured loans prepayments hereunder shall be based on the current cost of funds to the Department of the Treasury for obligations of comparable maturity to those being prepaid. If a borrower prepays using tax exempt financing, the discount shall be adjusted to make the discount equivalent to fully taxable financing. The borrower shall certify in writing whether the financing will be tax exempt and shall comply with such other terms and conditions as the Secretary may establish which are reasonable and necessary to implement this provision. As used in this section, the term “direct loan” means a loan made under section 904 of this title.
(May 20, 1936, ch. 432, title III, § 306B, as added Pub. L. 99–509, title I, § 1011(a), Oct. 21, 1986, 100 Stat. 1876; amended Pub. L. 101–624, title XXIII, § 2387, Nov. 28, 1990, 104 Stat. 4051; Pub. L. 102–428, § 2, Oct. 21, 1992, 106 Stat. 2183; Pub. L. 103–354, title II, § 235(a)(13), Oct. 13, 1994, 108 Stat. 3221.)
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U.S. Code
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- Public Law 99–508To amend title 18, United States Code, with respect to the interception of certain communications, other forms of surveillance, and for other purposes
- Public Law 101–624To extend and revise agricultural price support and related programs, to provide for agricultural export, resource conservation, farm credit, and agricultural research and related programs, to ensure consumers an abundance of food and fiber at reasonable prices, and for other purposes
- Public Law 102–428To amend the Rural Electrification Act of 1936 to improve the provision of electric and telephone service in rural areas, and for other purposes
statute-compilations
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- May 20, 1936, ch. 432
- Pub. L. 99–509, title I, § 1011(a)
- 100 Stat. 1876
- Pub. L. 101–624, title XXIII, § 2387
- 104 Stat. 4051
- Pub. L. 102–428, § 2
- 106 Stat. 2183
- Pub. L. 103–354, title II, § 235(a)(13)
- 108 Stat. 3221
- Pub. L. 102–428
- Pub. L. 103–354
- Pub. L. 102–428, § 2(a)
- Pub. L. 102–428, § 2(b)
- Pub. L. 101–624
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§ 936b
Sale or prepayment of direct or insured loans
Stat.×4
Stat. Comp.×1
U.S.C.×1
ActMay 20, 1936, ch. 432
Pub. L.Pub. L. 99–509, title I, § 1011(a)
Stat.100 Stat. 1876
Pub. L.Pub. L. 101–624, title XXIII, § 2387
Stat.104 Stat. 4051
Cites 16 · showing 7Cited by 6 across 3 sources