[Federal Register Volume 84, Number 39 (Wednesday, February 27, 2019)]
[Notices]
[Pages 6441-6444]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-03321]


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NATIONAL CREDIT UNION ADMINISTRATION


Community Development Revolving Loan Fund Access for Credit 
Unions

    Funding Opportunity Title: Community Development Revolving Loan 
Fund (CDRLF) Loan Program.
    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 loan awards for low-income designated credit unions (LICUs) through 
the CDRLF program. The CDRLF program serves as a source of financial 
support in the form of loans that better enables LICUs to support the 
communities in which they operate. CDRLF loan awards typically range 
from $250,000 to $500,000. 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. Federal Award Information
C. Eligibility Information
D. Application and Submission Information
E. Application Review Information
F. Federal Award Administration
G. Federal Awarding Agency Contacts

A. Program Description

    The purpose of the CDRLF program is to assist LICUs in providing 
basic financial services to their members to stimulate economic 
activities in their communities. Through the CDRLF program, the NCUA 
provides financial support in the form of loans to LICUs serving 
predominantly low-income members. 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.
    The CDRLF program consists of Congressional appropriations that are 
administered by the NCUA. Since its inception, Congress has 
appropriated approximately $13.4 million for revolving loans through 
the CDRLF program. The CDRLF's revolving loan component received its 
last appropriation in fiscal year 2005 for $200,000. Approximately $3.6 
million will be available for loans under this NOFO as of January 1, 
2019.

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 program. 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; and
    v. Operational programs such as security and disaster recovery.

2. Authority and Regulations

    i. Authority: 12 U.S.C. 1756, 1757(5)(D), and (7)(I), 1766, 1782, 
1784, 1785 and 1786; 12 CFR part 705.
    ii. Regulations: The regulation governing the CDRLF program is 
found at 12 CFR part 705. In general, this regulation is used by the 
NCUA to govern the CDRLF program and set forth the program 
requirements. Additional

[[Page 6442]]

regulations related to the CDRLF program are found at 12 CFR parts 701 
and 741. For the purposes of this NOFO, an Applicant is a Qualifying 
Credit Union that submits a complete Application to the NCUA under the 
CDRLF program. The NCUA encourages Applicants to review the 
regulations, this NOFO, and other program materials for a complete 
understanding of the program. Capitalized terms in this NOFO are 
defined in the authorizing statutes, regulations, and program 
materials.

B. Federal 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 $3.6 million, derived from prior-year appropriated 
and earned funds, will be available for qualified credit unions 
beginning January 1, 2019. 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 program.

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. A credit union may 
request a shorter loan period, 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.

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, or equivalent in the case of a Qualifying 
State-chartered Credit Union, in order to participate in the CDRLF 
program. Requirements for obtaining the designation is defined in 12 
CFR 701.34.

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 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 Requiring 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. 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

[[Page 6443]]

Applicant with a past record of noncompliance, including any 
deobligation (i.e. removal of unused awards) of funds.
    a. Default Status: 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. Undisbursed Funds: If an Applicant is a prior awardee under the 
CDRLF program and has unused awards as of the date of Application, the 
NCUA will 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 Form

    The application and related documents can be found on the NCUA's 
website at https://www.ncua.gov/services/Pages/resources-expansion/grants-loans.aspx. Under this NOFO, Applications must be submitted 
online at https://www.cybergrants.com/ncua/applications.

2. Application Content

    i. Data Universal Numbering System: 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. Applicants can obtain a DUNS number by 
visiting the Dun & Bradstreet (D&B) website or calling 1-866-705-5711 
to register or search for a DUNS number. Registering for a DUNS number 
is FREE. 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.
    ii. 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. Applicants can 
register by visiting www.sam.gov. An active SAM account status and CAGE 
number is required to apply for the NCUA's CDRLF programs. The SAM 
registration process is FREE. Applicants that have an existing 
registration with SAM must recertify and maintain an active status 
annually. 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.
    iii. 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 at 
www.irs.gov.
    iv. Large Loans: An Applicant requesting a loan in excess of 
$300,000 is required to provide additional narrative comments to 
support the request. In addition, the NCUA may also require a business 
plan. The business plan should: 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.
    v. 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. Examination by the NCUA: 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 loan 
agreement of the Participating Credit Union.

3. Submission Dates and Times

    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 and in this NOFO. An incomplete 
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 that receives a substantive review 
on the four criteria described in the regulation, this NOFO and the 
applicable guideline: 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. Substantive Review

    The purpose of the substantive 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. When loan demand 
is high, Applications will be ranked based on the aforementioned.

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F. Federal Award Adminsitration

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 Award Agency Contacts

1. Methods of Contact

    Further information can be found at https://www.ncua.gov/services/Pages/resources-expansion/grants-loans.aspx. For questions email: 
National Credit Union Administration, 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 February 
21, 2019.
Gerard Poliquin,
Secretary of the Board.
[FR Doc. 2019-03321 Filed 2-26-19; 8:45 am]
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