The Loan Application Process
Stan Wastowicz, Chief Northern Division Operations Branch Email: stanley.wastowicz@wdc.usda.gov Phone: 202-720-0733 Roland Woodfolk, Chief Southern Division Operations Branch Email: roland.woodfolk@wdc.usda.gov Phone: 202-720-0803
The Loan Application Process
• 1. 2. Complete Application (7 CFR Part 1737.21 – 22) A completed application, RUS Form 490 A market survey, RUS Form 569, Local Service Data Form (formerly known as the Area Coverage Survey) The construction and business plan or Loan Design Various supplemental information specified in 7 CFR Part 1737.22
3. 4.
The Loan Application Process
Application Checklist - next slide An enlarged hard copy of the checklist is being provided with the handouts at the meeting.
USDA-RURAL UTILITIES SERVICE LOAN CHECKLIST BORROWER RESPONSIBILITY: ALL APPLICANTS
BORROWER DESIGNATION LOAN SPECIALIST GFR 7 CFR 1737 Subpart C
RUS Form 490 Loan Maturity Statement Regarding Delinquency on Federal Debt Certified Financial Statements (last 3 years) Toll Settlement Statements (Schedule F) (check G:/ASD for latest form ) Exchange Rates (present & proposed) Borrowers Environmental Report Certification Regarding Lobbying (need separate Lobbying Certification for FFB) AD 1047 - Certification Regarding Debarm ent (new form dated 6/98) Approved Depreciation Rates Area Coverage Survey/Loan Design (LD) (with certification 1737.32 (f)(3)) Rural Urban Statement Property Schedule/Attorney's Opinion Certification that LD Conforms With Approved STMP (not required if loan is 100% FFB) (signed by President of Co.) CPA Audit Report (Year End)
BORROWER RESPONSIBILITY: "A" LOAN APPLICANTS 7 CFR 1737.22 (if any of the following information has changed for a prior applicant, include in preloan package.) Board Resolution Selecting Attorney Board Resolution Selecting Manager Articles of Incorporation Bylaws and Board Minutes Adopting Articles Sample Stock Certificate Am ount of Stock Issued and Outstanding (comm on and preferred) Principal Stock Holders and Amount of Stock Held Copies of Real Estate Deeds Service Agreem ents (including toll/operator/EAS etc.) Copies of Existing Leases Copies of Existing Franchises Inform ation on Franchises Required Due to Loan FCC Authorizations (include approval to obtain USF) Certificate of Convenience and Necessity REA Form 291 - Certification of Nonsegregated Facilities Map of Service Area (existing & proposed) Assurances Required by Uniform Act Certification of Authority (Form 675) Request for Mail List Data (Form 87) Personal Experience Record of Manager (Form 328) GFR'S RESPONSIBILITY (ALL APPLICANTS) Nonduplication Finding Flood Finding (new form required) Loan Design Recommendation Manager's Recom mendation (for all "A" loans and any change for prior applicant) Dollar am ount of construction work com pleted or in progress to be reimbursed with new or existing loan funds Explanation of any atypical assets, liabilities, revenues, or expenses shown on financial statements
ACQUISITION (If required)
7 CFR 1735 Subpart G
Financial Information for Nonborrowers Involved Form 507 - Report on Telephone Acquisition Certified Copies of Real Estate Deeds Certified Copies of Existing Leases (except for vehicles, furniture, office & computer equipm ent) Certified Copies of Existing Franchises Plans of Incorporating Acquired Facilities/Members Number of Subscribers to be Acquired Proposed Purchase Price Copies of Bills of Sale, Deeds and Acquisition Agreem ents Appraisal by Borrower's Engineering of Physical Plant to be Acquired Copies of Leases to be Acquired Copies of any Existing Mortgages, Indentures List of All Counties in Which System Will Have Facilities/Subscribers REFINANCING (If required) Copies of Debt Instruments Details on Secured Indebtedness Justification for Refinancing 7 CFR 1737.22(c)
•
Subscriber forecasting
1. Be realistic – blue sky or exuberant forecasting will undermine credibility.
2. Variations from the historical growth trends must be supported [see 7 CFR Part 1737.31(c) (3)]. A field survey is best and is normally required for “A” loans, start-up companies, newly acquired serving areas, and areas with a significant change in projected growth patterns. Conversely, projected losses in subscribers should also be discussed.
3. Competitive telecommunications activities in the area should be described and taken into account in your projections. This should not only include threats from others into your serving areas, but also your plans to venture into surrounding areas served by another company, but previously not served by your company.
• Facilities financed by loan type (7 CFR Part 1735.17) Hardship & Guaranteed (FFB) √ √ √ Cost of money √
Improvements, expansion, construction, and acquisitions Station equipment (borrower owned), HQ (commercial), and vehicles (non-constr) Operations (limited)
• Qualifying for different types of loans (7 CFR Part 1735.30 – 32)
Hardship Density (subs./rte. mi. of line) TIER STMP NW
≥ 1.0 & ≤ 3.0 ≥ 1.0 & ≤ 5.0 √ * ≥ 1.2
Cost of money
≤ 15.0 *
Guaranteed (FFB)
≤ 4.0
√
20% recommended
* For Cost-of-money loans, need to meet either the density or TIER requirement, not both.
Financial Data Form 479 & CPA Audit
• Explanation and amount ($) of atypical or anomalous revenues or expenses • Details on composition of nonregulated and nonoperating income or losses • Need 5-year projections for each of the above components when losses are shown in the base year financials or large increases in income are expected
The Loan Application Process
Jerry Brent, Director Northern Division Email: jerry.brent@wdc.usda.gov Phone: 202-720-1025 Ken Chandler, Director Southern Division Email: ken.chandler@wdc.usda.gov Phone: 202-720-0803