
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 7USC940c]

 
                          TITLE 7--AGRICULTURE
 
         CHAPTER 31--RURAL ELECTRIFICATION AND TELEPHONE SERVICE
 
    SUBCHAPTER III--RURAL ELECTRIC AND TELEPHONE DIRECT LOAN PROGRAMS
 
Sec. 940c. Cushion of credit payments program


(a) Establishment

                           (1) In general

        The Secretary shall develop and promote a program to encourage 
    borrowers to voluntarily make deposits into cushion of credit 
    accounts established within the Rural Electrification and Telephone 
    Revolving Fund.

                            (2) Interest

        Amounts in each cushion of credit account shall accrue interest 
    to the borrower at a rate of 5 percent per annum.

                             (3) Balance

        A borrower may reduce the balance of its cushion of credit 
    account only if the amount obtained from the reduction is used to 
    make scheduled payments on loans made or guaranteed under this 
    chapter.

(b) Uses of cushion of credit payments

                           (1) In general

        (A) Cash balance

            Cushion of credit payments shall be held in the Rural 
        Electrification and Telephone Revolving Fund as a cash balance 
        in the cushion of credit accounts of borrowers.

        (B) Interest

            All cash balance amounts (obtained from cushion of credit 
        payments, loan payments, and other sources) held by the Fund 
        shall bear interest to the Fund at a rate equal to the weighted 
        average rate on outstanding certificates of beneficial ownership 
        issued by the Fund.

        (C) Credits

            The amount of interest accrued on the cash balances shall be 
        credited to the Fund as an offsetting reduction to the amount of 
        interest paid by the Fund on its certificates of beneficial 
        ownership.

              (2) Rural economic development subaccount

        (A) Maintenance of account

            The Secretary shall maintain a subaccount within the Rural 
        Electrification and Telephone Revolving Fund to which shall be 
        credited, on a monthly basis, a sum determined by multiplying 
        the outstanding cushion of credit payments made after October 1, 
        1987, by the difference (converted to a monthly basis) between 
        the average weighted interest rate paid on outstanding 
        certificates of beneficial ownership issued by the Fund and the 
        5 percent rate of interest provided to borrowers on cushion of 
        credit payments.

        (B) Grants

            The Secretary is authorized, from the interest differential 
        sums credited this subaccount and from any other funds made 
        available thereto, to provide grants or zero interest loans to 
        borrowers under this chapter for the purpose of promoting rural 
        economic development and job creation projects, including 
        funding for project feasibility studies, start-up costs, 
        incubator projects, and other reasonable expenses for the 
        purpose of fostering rural development.

        (C) Repayments

            In the case of zero interest loans, the Secretary shall 
        establish such reasonable repayment terms as will ensure 
        borrower participation.

        (D) Proceeds

            All proceeds from the repayment of such loans shall be 
        returned to the subaccount.

        (E) Number of grants

            Such loans and grants shall be made during each fiscal year 
        to the full extent of the amounts held by the rural economic 
        development subaccount, subject only to limitations as may be 
        from time-to-time imposed by law.

(May 20, 1936, ch. 432, title III, Sec. 313, as added Pub. L. 100-203, 
title I, Sec. 1403, Dec. 22, 1987, 101 Stat. 1330-21; amended Pub. L. 
103-354, title II, Sec. 235(a)(13), Oct. 13, 1994, 108 Stat. 3221.)


                               Amendments

    1994--Subsecs. (a)(1), (b)(2)(A) to (C). Pub. L. 103-354 substituted 
``Secretary'' for ``Administrator''.

                  Section Referred to in Other Sections

    This section is referred to in sections 912, 6944 of this title.
