[Federal Register Volume 85, Number 63 (Wednesday, April 1, 2020)]
[Notices]
[Pages 18282-18285]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-06714]
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NATIONAL CREDIT UNION ADMINISTRATION
Community Development Revolving Loan Fund Access for Credit
Unions
ACTION: Notice of funding opportunity.
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FUNDING OPPORTUNITY TITLE: Community Development Revolving Loan Fund
(CDRLF) Loans
CATALOG OF FEDERAL DOMESTIC ASSISTANCE (CFDA) NUMBER: 44.002.
SUMMARY: The National Credit Union Administration (NCUA) is issuing
this Notice of Funding Opportunity (NOFO) to announce the availability
of loans (awards) for low-income designated credit unions (LICUs)
through the CDRLF. The CDRLF serves as a source of financial support in
the form of loans and technical assistance grants that better enable
LICUs to support the communities in which they operate. All awards made
under this NOFO are subject to funds availability and are at the NCUA's
discretion.
Table of Contents
A. Program Description
B. Award Information
C. Eligibility Information
D. Application and Submission Information
E. Application Review Information
F. Federal Award Administration
G. Federal Awarding Agency
A. Program Description
The purpose of the CDRLF is to assist LICUs in providing basic
financial services to their members to stimulate economic activities in
their communities. The CDRLF consists of Congressional appropriations
that are administered by the NCUA. Through the CDRLF, the NCUA provides
financial support in the form of awards to LICUs. These funds help
improve and expand the availability of financial services to these
members. The NCUA accepts loan applications on a continuous basis
subject to funding availability.
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Since its inception, Congress has appropriated approximately $13.4
million for revolving loans through the CDRLF. The CDRLF's revolving
loan component received its last appropriation in fiscal year 2005 for
$200,000. Approximately $7 million will be available for loans under
this NOFO as of March 27, 2020.
1. Permissible Uses of Loan Funds
The NCUA may consider requests for loan funds for various uses. A
non-exhaustive list of examples of permissible uses or projects is
defined in 12 CFR 705.4. The NCUA may consider other proposed uses of
loan funds that are not listed if it determines the Proposal to be
consistent with the purpose of the CDRLF. The list includes the
following:
i. Development of new products or services for members, including
new or expanded share draft or credit card programs;
ii. Partnership arrangements with community-based service
organizations or government agencies;
iii. Loan programs, including, but not limited to, microbusiness
loans, payday loan alternatives, education loans, and real estate
loans;
iv. Acquisition, expansion, or improvement of office space or
equipment, including branch facilities, ATMs, and electronic banking
facilities;
v. Operational programs such as security and disaster recovery; and
vi. Responding to emergencies such as pandemics, natural disasters,
economic downturns, etc. The NCUA recognizes that these emergencies
will impact the credit union industry to varying degrees. The NCUA
intends to support the efforts of LICUs through emergency funding
needed to respond to unexpected and unplanned events. Specific details
will be defined and provided in the applicable guidelines and posted on
NCUA's website.
2. Authority and Regulations
i. Authority: 12 U.S.C. 1772c-1, 1756, 1757(5)(D), and (7)(I),
1766, 1782, 1784, 1785 and 1786;
ii. Regulations: The regulation governing the CDRLF is found at 12
CFR part 705. In general, this regulation is used by the NCUA to govern
the CDRLF and set forth the program requirements. Additional
regulations related to the low-income designation are found at 12 CFR
parts 701.34 and 741.204. For the purposes of this NOFO, an
``Applicant'' is a Participating Credit Union that submits a complete
application to the NCUA under the CDRLF. The NCUA encourages Applicants
to review the regulations, this NOFO, and other program materials for a
complete understanding of the program.
B. Award Information
The NCUA expects to award as many qualified credit unions as
possible through this NOFO, subject to funding availability. CDRLF
loans are typically made at lower than market interest rates.
Approximately $7 million, derived from prior-year appropriated and
earned funds, will be available for qualified credit unions beginning
March 27, 2020. The amount of funding available for CDRLF loans
fluctuate whenever previously scheduled loans are fully amortized and/
or if Congress makes an appropriation to the CDRLF revolving loan
component. The NCUA reserves the right to: (i) Award more or less than
the amounts cited above; (ii) fund, in whole or in part, any, all, or
none of the applications submitted in response to this NOFO; and (iii)
reallocate funds from the amount that is anticipated to be available
under this NOFO to other programs, particularly if the NCUA determines
that the number of awards made under this NOFO is fewer than projected.
The specific terms and conditions governing a CDRLF award will be
established in the loan documents that each Participating Credit Union
must sign prior to disbursement of funds. The rest of this section
contains general award information regarding loans made through the
CDRLF.
1. Loan Amount
The NCUA makes loans based on the financial condition of the credit
union. The applicable regulation does not provide a maximum limit on
loan applications for consideration, but in practice the NCUA
discourages loan applications of higher than $500,000 to mitigate risk.
There is no minimum loan amount. CDRLF loan awards typically range from
$250,000 to $500,000. The amount of the loan will be based on the
following factors:
i. Funds availability:
ii. Credit worthiness of the credit union;
iii. Financial need;
iv. Demonstrated capability of the credit union to provide
financial and related services to its members; and
v. Concurrence from the credit union's NCUA regional office and/or
the applicable the State Supervisory Authority (SSA) for qualifying
state-chartered credit unions.
2. Maturity
CDRLF loans will generally mature in five years. The loan period
may be shorter at the NCUA's discretion or at the request of the credit
union, but in no case will the term exceed five years.
3. Interest Rate
The interest rate on CDRLF loans is governed by the CDRLF Loan
Interest Rate Policy. The policy can be found on the NCUA's website at
https://www.ncua.gov/support-services/credit-union-resources-expansion/grants-loans/loans. CDRLF loans are generally offered at a fixed rate
for the full term. The NCUA reserves the right to reduce the interest
rate when it benefits the objectives of CDRLF priorities and/or
initiatives.
The NCUA may decide to lower the interest rate and change the loan
terms during emergency conditions as described under Section A
Permissible Use of Loan Funds of this document.
4. Repayment
All loans must be repaid to the NCUA regardless of how they are
accounted for by the Participating Credit Union.
i. Principal: The entire principal is due at maturity.
ii. Interest: Interest is due in semi-annual payments beginning six
months after the initial distribution of the loan.
iii. Principal Prepayment: There is no penalty for principal
prepayment. Principal prepayments may be made as often as monthly.
C. Eligibility Information
1. Eligible Applicants
This NOFO is open to credit unions that meet the eligibility
requirements defined in 12 CFR part 705. A credit union must have a
low-income designation obtained in accordance with 12 CFR 701.34 or
741.204 in order to participate in the CDRLF.
i. Non-Federally Insured Applicants: Each Applicant that is a non-
federally insured, state-chartered credit union must submit additional
application materials. These additional materials are more fully
described in 12 CFR 705.7(b)(3) and in the application.
a. Non-federally insured, state-chartered credit unions must agree
to be examined by the NCUA. The specific terms and covenants pertaining
to this condition will be provided in the award agreement of the
Participating Credit Union.
2. Matching Funds (if Applicable)
At its discretion, the NCUA may require the Applicant to submit a
functional plan to meet the matching funds requirement depending on the
financial condition of the Applicant. The NCUA anticipates that most
Applicants will not be required to
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obtain matching funds. 12 CFR 705.5(g) of the NCUA's regulations
describe the overall requirements for matching funds.
i. Matching Funds Requirements: The specific terms and covenants
pertaining to any matching funds requirement will be provided in the
loan agreement of the Participating Credit Union. Following, are
general matching fund requirements. The NCUA, in its sole discretion,
may amend these requirements depending upon its evaluation of the
Applicant, but in no case will the amended requirements be greater than
the conditions listed below.
a. The amount of matching funds required must generally be in an
amount equal to the loan amount.
b. Matching funds must be from non-governmental member or nonmember
share deposits.
c. Any loan monies matched by nonmember share deposits are not
subject to the 20% limitation on nonmember deposits defined in 12 CFR
701.32.
d. Participating Credit Unions must maintain the outstanding loan
amount in the total amount of share deposits for the duration of the
loan. Once the loan is repaid, nonmember share deposits accepted to
meet the matching requirement are subject to requirements defined in
defined in 12 CFR 701.32.
ii. Criteria for Matching Funds: The NCUA will use the following
criteria to determine whether to require an Applicant to have matching
funds as a condition of its loan.
a. CAMEL Composite Rating
b. CAMEL Management Rating
c. CAMEL Asset Quality Rating
d. Regional Director Concurrence
e. Net Worth Ratio
iii. Documentation of Matching Funds: The NCUA may contact the
matching funds source to discuss the matching funds and the
documentation that the Applicant has provided. If the NCUA determines
that any portion of the Applicant's matching funds is ineligible under
this NOFO, the NCUA, in its sole discretion, may permit the Applicant
to offer alternative matching funds as a substitute for the ineligible
matching funds. In this case, the Applicant must provide acceptable
alternative matching funds documentation within 10 business days of the
NCUA's request.
3. Data Universal Numbering System (DUNS) Number
The Data Universal Numbering System (DUNS) number is a unique nine-
character number used to identify your organization. The federal
government uses the DUNS number to track how federal money is
allocated. Registering for a DUNS number is FREE. Applicants can obtain
a DUNS number by visiting the Dun & Bradstreet (D&B) website or calling
1-866-705-5711. The NCUA will not consider an application that does not
include a valid DUNS number issued by Dun and Bradstreet (D&B). Such an
application will be deemed incomplete and will be declined.
4. Employer Identification Number
Each application must include a valid and current Employer
Identification Number (EIN) issued by the U.S. Internal Revenue Service
(IRS). The NCUA will not consider an application that does not include
a valid and current EIN. Such an application will be deemed incomplete
and will be declined. Information on how to obtain an EIN may be found
on the IRS's website.
5. System for Award Management
All Applicants are required by federal law to have an active
registration with the federal government's System for Award Management
(SAM) prior to applying for funding. SAM is a web-based, government-
wide application that collects, validates, stores, and disseminates
business information about the federal government's trading partners in
support of the contract awards, grants, and electronic payment
processes. An active SAM account status and CAGE number is required to
apply for a CDRLF award. Credit unions that have an existing
registration with SAM must recertify and maintain an active status
annually. The SAM registration and recertification process is FREE.
First-time SAM users can register by following the instructions in the
Quick Start Guide for New Registrations. Existing users can recertify
or renew their SAM account status by following the instructions in the
Quick Start Guide for Renewing Registrations. The NCUA will not
consider an applicant that does not have an active SAM status. Such an
application will be deemed incomplete and will be declined.
6. Other Eligibility Requirements
i. Financial Viability: Applicants must meet the underwriting
standards established by the NCUA, including those pertaining to
financial viability, as set forth in the application and defined in 12
CFR 705.7(c).
ii. Compliance with Past Agreements: In evaluating funding requests
under this NOFO, the NCUA will consider an Applicant's record of
compliance with past agreements. The NCUA, in its sole discretion, will
determine whether to consider an application from an Applicant with a
past record of noncompliance, including any deobligation (i.e. removal
of unused awards) of funds.
a. If an Applicant is in default of a previously executed agreement
with the NCUA, the NCUA will not consider an application for funding
under this NOFO.
b. If an Applicant is a prior Participating Credit Union under the
CDRLF and has unused awards as of the date of application, the NCUA may
request a narrative from the Applicant that addresses the reason for
its record of noncompliance. The NCUA, in its sole discretion, will
determine whether the reason is sufficient to proceed with the review
of the application.
D. Application and Submission Information
1. Application
Under this NOFO, all applications must be submitted online in the
NCUA's web-based application system, CyberGrants, in order to be
considered. Applications must be submitted online at https://www.cybergrants.com/ncua/applications. The application and related
documents are also located on the NCUA's website at https://www.ncua.gov/services/Pages/resources-expansion/grants-loans.aspx.
2. Minimum Application Content
At a minimum, the application will require credit unions to provide
information about the following core application contents: (i) Project
title; (ii) loan amount requested; (iii) total cost of the proposed
project; (iv) project activity or objective; and (v) proposed use of
the loan funds.
3. Submission Dates and Times
i. COVID-19 Emergency Support Loan: The NCUA will accept
applications beginning March 27, 2020, at 9:00 a.m. eastern time (ET)
for this initiative. Applications must be submitted by May 22, 2020, at
11:59 p.m. ET.
ii. All Other Loans: The NCUA accepts applications on a continuous
basis subject to funding availability.
E. Application Review Information
1. Eligibility and Completeness Review
The NCUA will review each application to determine whether it is
complete and that the Applicant meets the eligibility requirements
described in the regulations, program guidelines, and in this NOFO. An
incomplete
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application or one that does not meet the eligibility requirements will
be declined without further consideration.
2. Evaluation Criteria
The evaluation criteria is fully described in 12 CFR 705.7(c). The
NCUA will evaluate each application on accordance with the criteria
described in the regulation, this NOFO and program guidelines:
Financial performance, compatibility, feasibility, and examination
information and applicable concurrence. Each initiative, due to its
structure and impact, have varying degrees of evaluation criteria
assigned which are reflected in the guidelines for credit union's
information.
3. Application Review
The purpose of the application review is to determine whether the
NCUA should support and fund the loan request. During this phase of the
review, the NCUA reviews the credit union's prior financial and
operational performance, the collateral offered to securitize the loan
(if applicable), and its longevity in operation. The NCUA reserves the
right to contact the Applicant during its review for the purpose of
clarifying or confirming information contained in the application. If
so contacted, the Applicant must respond within the time specified by
the NCUA or the NCUA, in its sole discretion, may decline the
application without further consideration.
4. Examination Information and Applicable Concurrence
The NCUA will not approve an award to a credit union for which it's
NCUA regional examining office or SSA, if applicable, indicates it has
safety and soundness concerns. If the NCUA regional office or SSA
identifies a safety and soundness concern, the NCUA, in conjunction
with the regional office or SSA, will assess whether the condition of
the Applicant is adequate to undertake the activities for which funding
is requested, and the obligations of the loan and its conditions. The
NCUA, in its sole discretion, may defer decision on funding an
application until the credit union's safety and soundness conditions
improve.
5. Funding Selection
The NCUA will make its funding selections based on a consistent
scoring tier for each Applicant. The NCUA will consider the impact of
the funding. In addition, the NCUA may consider the geographic
diversity of the Applicants in its funding decisions.
F. Federal Award Administration
1. Federal Award Notice
The NCUA will notify each Applicant of its funding decision by
email. Applicants that are approved for funding will also receive
instructions on how to proceed with disbursement of the award.
2. Administrative and National Policy Requirements
i. Loan Agreement: Each Participating Credit Union under this NOFO
must enter into an agreement with the NCUA before the NCUA will
disburse the award funds. The agreement documents include, for example,
a promissory note, loan agreement, repayment schedule, and security
agreement (if applicable). The agreement will include the terms and
conditions of funding, including but not limited to the: (i) Award
amount; (ii) interest rate; (iii) repayment requirements; (iv)
accounting treatment; (v) impact measures; and (vi) reporting
requirements.
ii. Failure to Sign Agreement: The NCUA, in its sole discretion,
may rescind an award if the Applicant fails to sign and return the
agreement or any other requested documentation, within the time
specified by the NCUA.
iii. Multiple Disbursements: The NCUA may determine, in its sole
discretion, to fund a loan in multiple disbursements. In such cases,
the process for disbursement will be specified by the NCUA in the loan
agreement.
3. Reporting
The reporting requirements are more fully described in 12 CFR
705.9. Annually, each Participating Credit Union will submit a report
to the NCUA. The report will address the Participating Credit Union's
use of the loan funds; the impact of funding; and explanation of any
failure to meet objectives for use of proceeds, outcome, or impact. The
NCUA, in its sole discretion, may modify these requirements. However,
such reporting requirements will be modified only after notice to
affected credit unions.
i. Report Form: Applicable credit unions will be notified regarding
the submission of the report form. A Participating Credit Union is
responsible for timely and complete submission of the report. The NCUA
will use such information to monitor each Participating Credit Union's
compliance with the requirements of its loan agreement and to assess
the impact of the CDRLF loan.
G. Federal Awarding Agency
1. Methods of Contact
Further information can be found at https://www.ncua.gov/services/Pages/resources-expansion/grants-loans.aspx. For questions related to
the CDRLF, email the NCUA's Office of Credit Union Resources and
Expansion at [email protected].
2. Information Technology Support
People who have visual or mobility impairments that prevent them
from using the NCUA's website should call (703) 518-6610 for guidance
(this is not a toll free number).
By the National Credit Union Administration Board on March 26,
2020.
Gerard Poliquin,
Secretary of the Board.
[FR Doc. 2020-06714 Filed 3-31-20; 8:45 am]
BILLING CODE 7535-01-P