Page:United States Statutes at Large Volume 85.djvu/209

 85

PUBLIC LAW 92-70-AUG. 9, 1971

STAT.]

179

(b) Loans guaranteed under this Act shall be payable in not more than five years, but may be renewable for not more than an additional three years. (c)(1) Loans guaranteed under this Act shall bear interest payable to the lending institutions at rates determined by the Board taking into account the reduction in risk afforded by the loan guarantee and rates charged by lending institutions on otherwise comparable loans. (2) The Board shall prescribe and collect a guarantee fee in connection with each loan guaranteed under this Act. Such fee shall reflect the Government's administrative expense in making the guarantee and the risk assumed by the Government and shall not be less than an amount which, when added to the amount of interest payable to the lender of such loan, produces a total charge appropriate for loan agreements of comparable risk and maturity if supplied by the normal capital markets. S E C U R I T Y FOR LOAN

Interest r a t e s determination.

Guarantee fee.

GUARANTEES

SEC. 5. I n negotiating a loan guarantee under this Act, the Board shall make every effort to arrange that the payment of the principal of and interest on any plan guaranteed shall be secured by sufficient property of the enterprise to collateralize fully the amount of the loan guarantee. REQUIREMENTS APPLICABLE TO LOAN

GUARANTEES

SEC. 6. (a) A guarantee agreement made under this Act with respect /

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to an enterprise shall require that while there is any principal or prohibition. interest remaining unpaid on a guaranteed loan to that enterprise the enterprise may not— (1) declare a dividend on its common stock; or (2) make any payment on its other indebtedness to a lender whose loan has been guaranteed under this Act. Waiver, The Board may waive either or both of the requirements set forth in this subsection, as specified in the guarantee agreement covering a loan to any particular enterprise, if it determines that such waiver is not inconsistent with the reasonable protection of the interests of the United States under the guarantee. Managerial (b) If the Board determines that the inability of an enterprise to c h a n g e s. obtain credit without a guarantee under this Act is the result of a failure on the part of management to exercise reasonable business prudence in the conduct of the affairs of the enterprise, the Board shall req[uire before guaranteeing any loan to the enterprise that the enterprise make such management changes as the Board deems necessary to give the enterprise a sound managerial base. Financial state(c) A guarantee of a loan to any enterprise shall not be made under ment. this Act unless— (1) the Board has received an audited financial statement of the enterprise; and (2) the enterprise permits the Board to have the same access to its books and other documents as the Board would have under section 7 in the event the loan is guaranteed. (d) No payment shall be made or become due under a guarantee entered into under this Act unless the lender has exhausted any remedies which it may have under the guarantee agreement. (e)(1) Prior to making any guarantee under this Act, the Board shall satisfy itself that the underlying loan agreement on which the guarantee is sought contains all the affirmative and negative covenants 75-432 O - 72 - 14

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