[Federal Register Volume 82, Number 95 (Thursday, May 18, 2017)]
[Notices]
[Pages 22854-22857]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-10088]
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NATIONAL CREDIT UNION ADMINISTRATION
Office of Small Credit Union Initiatives (OSCUI) Loan Program
Access for Credit Unions
AGENCY: National Credit Union Administration (NCUA).
ACTION: Notice of funding opportunity.
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SUMMARY: The National Credit Union Administration (NCUA) is issuing a
Notice of Funding Opportunity (NOFO) to invite eligible credit unions
to submit applications for participation in the OSCUI Loan Program
(a.k.a. Community Development Revolving Loan Fund (CDRLF)), subject to
funding availability. The OSCUI Loan Program serves as a source of
financial support, in the form of loans, for credit unions serving
predominantly low-income members. It also serves as a source of funding
to help low-income designated credit unions (LICUs) respond to
emergencies arising in their communities.
Table of Contents
A. Program Description
B. Federal 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 OSCUI Loan Program is to assist low-income
designated credit unions (LICU) in providing basic financial services
to their members to stimulate economic activities in their communities.
Through the OSCUI Loan Program, NCUA provides financial support in the
form of loans to LICUs. These funds help improve and expand the
availability of financial services to these members. The OSCUI Loan
Program also serves as a source of funding to help LICUs respond to
emergencies. The Loan Program consists of Congressional appropriations
that are administered by OSCUI, an office of the NCUA.
Permissible Uses of Funds: NCUA will consider requests for funds
consistent with the purpose of the OSCUI Loan Program. 12 CFR 705.1. A
non-exhaustive list of examples of permissible uses or projects of loan
proceeds are contained in Sec. 705.4 of the regulation, and include:
(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
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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;
and (v) Operational programs such as security and disaster recovery.
NCUA will consider other proposed uses of funds that in its sole
discretion it determines are consistent with the purpose of the OSCUI
Loan Program, the requirements of the regulations, and this NOFO.
Regulation: Part 705 of NCUA's regulations implements the OSCUI
Grant and Loan Program. 12 CFR 705. A revised Part 705 was published on
November 25, 2016. 81 FR 85112. Additional requirements are found at 12
CFR 701 and 741. Applicants should review these regulations in addition
to this NOFO. Each capitalized term in this NOFO is more fully defined
in the regulations, the loan application, and the loan agreement. For
the purposes of this NOFO, an Applicant is a Qualifying Credit Union
that submits a complete Application to NCUA under the OSCUI Loan
Program.
B. Federal Award Information
OSCUI loans are made to LICUs that meet the requirements in the
program regulation and this NOFO, subject to funds availability. OSCUI
loans are generally made at lower than market interest rates.
Congress has not made an appropriation to the OSCUI Loan Program
for Fiscal Years 2016-2017. NCUA anticipates that approximately $3.2
million will be available for loans under this NOFO, derived from
prior-year appropriated and earned funds. Monies for additional loans
come from scheduled loan amortizations. NCUA reserves the right to: (i)
Award more or less than the amount 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 NCUA determines that the number of awards made under
this NOFO is fewer than projected.
The specific terms and conditions governing a loan will be
established in the loan documents each Participating Credit Union will
sign prior to disbursement of funds. The following are the general loan
terms under the program
1. Maximum Loan Amount: 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 NCUA discourages loan applications of higher than $500,000 to
mitigate risk. There is no minimum loan amount.
The amount of the loan will be based on the following factors:
Funds availability.
Credit worthiness of the credit union.
Financial need.
Demonstrated capability of credit union to provide
financial and related services to its members.
Concurrence from the Region and/or the applicable State
Supervisory Authority (SSA).
2. Dates: The application period corresponds to the date of this
NOFO and is open until funds are exhausted.
3. Maturity: Loans will generally mature in five years. A credit
union may request a shorter loan period, but in no case will the term
exceed five years.
4. Interest: The interest rate on loans is governed by the Loan
Interest Rate Policy, which can be found on NCUA's Web site at https://www.ncua.gov/services/Pages/small-credit-union-learning-center/services/grants-loans.aspx.
5. Repayment: All loans must be repaid to NCUA regardless of how
they are accounted for by the Participating Credit Union.
(a) Principal: The entire principal is due at maturity.
(b) Interest: Interest is due in semi-annual payments beginning six
months after the initial distribution of the loan.
(c) Principal Prepayment: There is no penalty for principal
prepayment. Principal prepayments may be made as often as monthly.
C. Eligibility Information
The regulations specify the requirements a credit union must meet
in order to be eligible to apply for assistance under this NOFO. See 12
CFR 705. Following are additional requirements for participating in the
Loan Program under this NOFO.
1. Eligible Applicants: A credit union must have a Low-Income
Credit Union (LICU) designation, or equivalent in the case of a
Qualifying State-chartered Credit Union, in order to participate in the
OSCUI Grant and Loan Program. Requirements for obtaining the
designation are found at 12 CFR 701.34.
2. Matching Funds: Part 705.5(g) of NCUA's regulations describe the
overall requirements for matching funds. NCUA, in its sole discretion,
may require matching funds of an Applicant, on a case-by-case basis
depending on the financial condition of the Applicant. NCUA anticipates
that most Applicants will not be required to obtain matching funds.
However, each Applicant should address in the Application its strategy
for raising matching funds if NCUA determines matching funds are
required (see 12 CFR 705 and the Application for additional
information).
(a) 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. 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.
(i) The amount of matching funds required must generally be in an
amount equal to the loan amount.
(ii) Matching funds must be from non-governmental member or
nonmember share deposits.
(iii) Any loan monies matched by nonmember share deposits are not
subject to the 20% limitation on nonmember deposits under Sec. 701.32
of NCUA's regulations.
(iv) 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 Sec. 701.32 of NCUA's
regulations.
(b) Criteria for Requiring Matching Funds: NCUA will use the
following criteria to determine whether to require an Applicant to have
matching funds as a condition of its loan.
(i) CAMEL Composite Rating.
(ii) CAMEL Management Rating.
(iii) CAMEL Asset Quality Rating.
(iv) Regional Director Concurrence.
(v) Net Worth Ratio.
(c) Documentation of Matching Funds: NCUA may contact the matching
funds source to discuss the matching funds and the documentation that
the Applicant has provided. If NCUA determines that any portion of the
Applicant's matching funds is ineligible under this NOFO, 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:
(i) The Applicant must provide acceptable alternative matching funds
documentation within 10 business days of NCUA's request.
3. Other Eligibility Requirements:
(a) Financial Viability: Applicants must meet the underwriting
standards established by NCUA, including those pertaining to financial
viability, as set
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forth in the application and found in 12 CFR 705.7(c).
(b) Compliance With Past Agreements: In evaluating funding requests
under this NOFO, NCUA will consider an Applicant's record of compliance
with past agreements, including any deobligation of funds. 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.
(i) Default Status: If an Applicant is in default of a previously
executed agreement with NCUA, NCUA will not consider an Application for
funding under this NOFO.
(ii) Undisbursed Funds: NCUA may not consider an Application if the
Applicant is a prior awardee under the OSCUI Grant Program and has
unused grant awards as of the date of Application.
D. Application and Submission Information
1. Application Form: The application and related documents can be
found on NCUA's Web site at https://www.ncua.gov/services/Pages/small-credit-union-learning-center/services/grants-loans.aspx.
2. Minimum Application Content: Each Applicant must complete and
submit information regarding the applicant and requested funding. In
addition, applicants will be required to certify applications prior to
submission.
(a) DUNS Number: NCUA will not consider an Application that does
not include a valid Data Universal Numbering System (DUNS) number
issued by Dun and Bradstreet (D&B). Such an Application will be deemed
incomplete and will be declined. See Section 3 for additional
information.
(b) System for Award Management (SAM): All Applicants are required
by federal law to have an active registration with the federal
government's System for Award Management prior to applying for funding.
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. See Section 3 for additional information.
(c) Employer Identification Number: Each Application must include a
valid and current Employer Identification Number (EIN) issued by the
U.S. Internal Revenue Service (IRS). 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 Web site at
www.irs.gov.
(d) Narrative Responses: Each Application must include the
narratives listed below. Applicants must adhere to character
limitations contained in the Application. NCUA will not consider
narrative comments beyond the limits specified. Additionally, NCUA will
only review information requested in the Application and will not
consider supplemental attachments that have not been requested in this
NOFO or the Application.
(i) Use of Funds: A narrative describing how it intends to use the
loan proceeds. The narrative should demonstrate that the loan will
enhance the products and services the credit union provides to its
members. It also should describe how those enhanced products and
services will support the economic development of the community served
by the credit union.
(ii) Matching Funds: A narrative describing its strategy for
raising matching funds from non-federal sources if matching funds are
required.
(e) Large Loans: An Applicant requesting a loan in excess of
$300,000 is required to complete an online application form that
contains additional narrative comments supporting such request. The
additional narrative consists of a business plan.
(i) Business Plan: The business plan must: describe the community's
need for financial products and services and the Applicant's need for
funding; summarize the services, financial products, and services
provided by the Applicant; describe the Applicant's involvement with
other entities; describe the credit union's marketing strategy to reach
members and the community; and include financial projections.
(f) Non-Federally Insured Applicants:
(i) Additional Application Requirements: 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 Sec. 705.7(b) (3) of NCUA's regulations and in the
Application.
(ii) Examination by NCUA: Non-federally insured, state-chartered
credit unions must agree to be examined by NCUA. The specific terms and
covenants pertaining to this condition will be provided in the loan
agreement of the Participating Credit Union.
3. Dun and Bradstreet Universal Numbering System (DUNS) Number and
System for Award Management (SAM): In accordance with Office of
Management and Budget, Uniform Administrative Requirements, Cost
Principles, and Audit Requirements for Federal Awards (2 CFR Chapter I,
Chapter II, part 200, et al.), credit unions are required to: (i) Be
registered in the System for Award Management (SAM) before submitting
its application; (ii) provide a valid Data Universal Numbering System
(DUNS) number issued by Dun and Bradstreet (D&B); and (iii) continue to
maintain an active SAM registration with current information at all
times during which it has an active Federal award or an application or
plan under consideration. NCUA will not consider an Application that
does not include a valid DUNS number and an active SAM status. Such an
Application will be deemed incomplete and will be declined. Information
on how to obtain a DUNS number may be found on D&B's Web site at http://fedgov.dnb.com/webform or by calling D&B, toll-free, at 1-866-705-
5711. Information on how to register for SAM may be found on SAM's Web
site at https://www.sam.gov.
4. Submission Dates and Times: The application period corresponds
to the dates of this NOFO and is open until funds are exhausted.
5. Other Submission Requirements: Under this NOFO, Applications
must be submitted online at http://www.cybergrants.com/ncua.
E. Application Review Information
1. Review and Selection Process:
(a) Eligibility and Completeness Review: NCUA will review each
Application to determine whether it is complete and that the Applicant
meets the eligibility requirements described in the Regulations and in
this NOFO. An incomplete Application or one that does not meet the
eligibility requirements will be declined without further
consideration.
(b) Substantive Review: After an Applicant is determined eligible
and its Application is determined complete, NCUA will conduct a
substantive review in accordance with the criteria and procedures
described in the Regulations and this NOFO. 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 NCUA
or NCUA, in its sole discretion, may decline the application without
further consideration.
(c) Evaluation: The evaluation criteria are more fully described in
Sec. 705.7(c) of NCUA's regulations. NCUA will evaluate each
Application that receives a substantive review on the four criteria
described in the regulation: financial
[[Page 22857]]
performance, compatibility, feasibility, and examination information
and applicable concurrence.
(i) Assessment of Impact: The Compatibility criteria will take into
consideration the extent of community need and projected impact of the
funding on the Applicant's members and community.
(ii) Effective Strategy: The Feasibility criteria will take into
consideration the quality of the Applicant's strategy and its capacity
to execute the strategy as demonstrated by its past performance,
partnering relationships, and other relevant factors.
(iii) Evaluating Prior Award Performance: For prior participants of
the OSCUI Grant and Loan Program, loans may not be awarded if the
participant: (1) Is noncompliant with any active award; (2) failed to
make timely loan payments to NCUA during fiscal years prior to the date
of Application; and (3) had an award deobligated (i.e. removal of
unused awarded funds) during fiscal years prior to the date of
Application.
(d) Examination Information and Applicable Concurrence: 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, OSCUI, 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. NCUA, in its sole
discretion, may defer decision on funding an Application until the
credit union's safety and soundness conditions improve.
(e) Funding Selection: NCUA will make its funding selections based
on a consistent scoring tier for each applicant. NCUA will consider the
impact of the funding. In addition, NCUA may consider the geographic
diversity of the Applicants in its funding decisions. When loan demand
is high, applications will be ranked based on the aforementioned.
F. Federal Award Administration
1. Federal Award Notices: NCUA will notify each Applicant of its
funding decision. Notification will generally be by email. Applicants
that are approved for funding will also receive instructions on how to
proceed with disbursement of the loan.
2. Administrative and National Policy Requirements: (a) Loan
Agreements: Each Participating Credit Union approved for funding under
this NOFO must enter into agreement with NCUA before NCUA will disburse
loan funds. The agreement documents include, for example, a promissory
note, loan agreement, amortization schedule, and security agreement (if
applicable). The Loan Agreement will include the terms and conditions
of funding, including but not limited to the: (i) Loan amount; (ii)
interest rate; (iii) repayment requirements; (iv) accounting treatment;
(v) impact measures; and (vi) reporting requirements.
3. Administrative and National Policy Requirements: (a) Loan
Agreements: Each Participating Credit Union under this NOFO must enter
into agreement with NCUA before NCUA will disburse loan funds. The
agreement documents include, for example, a promissory note, loan
agreement, repayment schedule, and security agreement (if applicable).
The Loan Agreement will include the terms and conditions of funding,
including but not limited to the: (i) Loan amount; (ii) interest rate;
(iii) repayment requirements; (iv) accounting treatment; (v) impact
measures; and (vi) reporting requirements.
(b) Failure To Sign Agreement: NCUA, in its sole discretion, may
rescind a loan offer if the Applicant fails to return the signed loan
documents and/or any other requested documentation, within the time
specified by NCUA.
(c) Multiple Disbursements: 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 NCUA in the Loan
Agreement.
3. Reporting: The reporting requirements are more fully described
in Sec. 705.9 of NCUA's regulations. Annually, each Participating
Credit Union will submit a report to 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. NCUA, in its sole discretion, may modify
these requirements. However, such reporting requirements will be
modified only after notice to affected credit unions.
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. 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 OSCUI Loan Program.
G. Agency Contacts
1. Methods of Contact: Further information can be found at: https://www.ncua.gov/services/Pages/small-credit-union-learning-center/services/grants-loans.aspx. For questions email: National Credit Union
Administration, Office of Small Credit Union Initiatives at
[email protected].
2. Information Technology Support: People who have visual or
mobility impairments that prevent them from using NCUA's Web site
should call (703) 518-6610 for guidance (this is not a toll free
number).
Authority: 12 U.S.C. 1756, 1757(5)(D), and (7)(I), 1766, 1782,
1784, 1785 and 1786; 12 CFR 705.
By the National Credit Union Administration Board on May 12,
2017.
Gerard Poliquin,
Secretary of the Board.
[FR Doc. 2017-10088 Filed 5-17-17; 8:45 am]
BILLING CODE 7535-01-P