[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

[[Page 22855]]

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