BPMi
          340/1-77-023
          DECEMBER 1977


          Stationary Source Enforcement Series
                MAJOR
 FINANCIAL ASSISTANCE PROGRAMS
           AVAILABLE FOR
        INDUSTRIAL POLLUTION
      CONTROL EXPENDITURES
(FEDERAL AND EPA REGION III STATE PROGRAMS)
                              Region 111 Library
                           Environmental Protection Agency
                              fi 12107
                 U.S. ENVIRONMENTAL PROTECTION AGENCY

                         Office of Enforcement
                           nf Hpnpral Fnf,   T .EPA Report Collection
                           01 ueneidl tni   Information Resource Center
                                           US EPA Region 3
                        Washington, D.C. <.	Philadelphia, A mo?

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                                                                       V
    MAJOR FINANCIAL ASSISTANCE PROGRAMS

             AVAILABLE  FOR

 INDUSTRIAL POLLUTION CONTROL EXPENDITURES

-FEDERAL AND EPA REGION III STATE PROGRAMS-
              Prepared  for
               Fred Knapp

            Project Officer
              Region  III
      Environmental Protection Agency
          6th and Walnut  Streets
     Philadelphia, Pennsylvania  19107
              June 1,  1977
              Prepared  by

          Charles R. Marshall
              JACA Corp.
    Fort Washington, Pennsylvania  19034
                                li,S. ri.-'fcnrrnlal Prctsction Agency.
                                r;,",'.jn Hi information Resource  -
                                Ce',Ua (3PM52)
                                                  /

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                                  TABLE OF CONTENTS

                                                                     Page

     SUMMARY                                                          i

I.    INTRODUCTION                                                    1-1

          Background                                                 1-1
          EPA's Role in Informing Firms of Assistance Programs       1-5
          Financial Program Description Format                       1-6

II.   FEDERAL FINANCIAL PROGRAMS FOR POLLUTION CONTROL               II- 1

       A.  Rapid Amortization of Pollution Control Equipment         II- 3
       B.  Industrial Development Bonds (IDBs)                       11-11
       C.  Small Business Administration Direct Compliance Loans     11-27
       D.  Small Business Administration Lease Guarantees            11-41
       E.  Economic Development Administration Financial Programs    11-49
       F.  Financial Assistance to Farmers and Rural Industry from
           the Farmers Home Administration and Small Business
           Administration                                           11-57
       G.  Industrial Cost Recovery Systems                          11-69

III.  CERTIFICATION FOR SMALL BUSINESS ADMINISTRATION POLLUTION
      CONTROL FINANCING                                            III- 1

       U.S.  Environmental Protection Agency Region III             III- 3

          Delaware                                                 III- 5
          Maryland                                                 III- 7
          Pennsylvania                                             III- 9
          Virginia                                                 III-ll
          West Virginia                                            111-13

 IV.   STATE FINANCIAL ASSISTANCE PROGRAMS FOR POLLUTION CONTROL     IV- 1

       Delaware                                                     IV- 3
       Maryland                                                     IV- 7
       Pennsylvania                                                 IV-11
       Commonwealth of Virginia        '                             IV-15
       West Virginia                                                IV-19

      APPENDICES

       A.   Rapid Amortization Certification Form

       B.   Federal Register, Federal Water Pollution Control
           Small Business Concerns; Final Rulemaking

       C.   SBA Field Offices Addresses and Telephone Numbers

       D.   Small Business Administration - Loan Application Form

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APPENDICES (continued)

 E.  Pilot Program Guidelines and Procedures for the Pollution
     Control Financing Program

 F.  Application for Commercial or Industrial Loan

 G.  U.S. Department of Agriculture - Farmers Home Administration
     Equal Opportunity Agreement

 H.  Memorandum of Understanding Between the Small Business Admin-
     istration and the United States Department of Agriculture
     Farmers Home Administration

 I.  Industrial Development Bond Fees

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                        LIST OF TABLES AND FIGURES
Tables
  I. FEDERAL AND EPA REGION III STATE FINANCIAL ASSISTANCE PROGRAMS
     FOR  INDUSTRIAL POLLUTION CONTROL EXPENDITURES                         iv

II. INDUSTRIAL CAPITAL AND POLLUTION CONTROL EXPENDITURES                 1-2

III. INDUSTRIAL POLLUTION CONTROL EXPENDITURES, 1975-1984                  1-4

IV. COMPARISONS OF POLLUTION CONTROL IDE FINANCING TO TOTAL MUNICIPAL
     BOND FINANCING AND TO TOTAL POLLUTION CONTROL CAPITAL EXPENDITURES  11-12

  V. SMALL BUSINESS ADMINISTRATION COMPLIANCE LOANS                       11-31
Figures


1.  INDIFFERENCE CURVE FOR AMORTIZATION OPTIONS UNDER THE TAX REFORM
     ACT OF 1976 AND FORMER 26 USC 169: TRADITIONAL VS. RAPID
     AMORTIZATION                                                        II- 5

2.  SBA AND FmHA ASSISTANCE FOR FARMERS AND RURAL BUSINESSES             11-67

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                               SUMMARY
       The industrial and farming sectors in the Environmental Protection




Agency's Region III have recourse to many federal and state programs aimed at




reducing pollution control expenditures.   The federal programs generally pro-




vide more significant cost reductions than the state programs.  Federal pro-




grams include long-term low interest rate loans and accelerated depreciation




for pollution control equipment.  The savings from these programs are generally




greater than the savings from the most common state programs of Region III, such




as sales and property tax exemptions and accelerated depreciation for state




corporate income taxes.




       The mining and manufacturing sectors have recourse to four federal




financing programs that provide low interest, long term loans.  One program,




Industrial Development Bonds (IDBs) is widely available; there are no budget




limitations but it is primarily available to larger, strong-credit businesses.




An Economic Development Administration (EDA) loan program is occassionally




available for large businesses with marginal credit positions.  For small




businesses that are substantially injured by pollution control requirements,




there are two Small Business Administration (SBA) programs that provide long




term, low interest rate loans.   These SBA programs are much more widely avail-




able in terms of funding than traditional SBA regular loan programs.  Businesses




that may not be included in any of the three programs are those with moderate




credit positions.




       The family farm sector has recourse to several loan programs, namely




those of the Farmers Home Administration (there are 5) and the Small Business




Administration for pollution control loans.   The corporate farm sector only

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has recourse to one Farmers Home Administration (FmHA)loan program but can




use SBA and IDB programs. FmHA programs are also characterized by limited




funds.




       In addition to financing, all existing businesses may amortize pollution




control equipment rapidly for federal income tax purposes.  However, rapid




amortization is only attractive for equipment with a useful life greater than




twelve years and where  the discount  rate  (when  using  present value  analyses)  is




greater than 10 percent.




       Businesses that have their wastewaters treated by a publicly owned treat-




ment works have an additional benefit that reduces pollution control costs.




Their proportionate share of treatment cost is reduced by the absence of an




interest cost for at least 75 percent of the construction costs of the works.




        Federal  and state financial  assistance  programs  are generally  available




for the different types  of pollution control, i.e.  air,  water  and solid waste.




The SBA programs,  however,  are presently  only for  controls  that  were pursuant




to the more recently imposed  federal laws such  as  the Clean Air  Act  of 1970 and




Federal Water Pollution Control  Act  Amendments  of  1972.   Requirements  imposed




solely at the local level,  such  as noise  control,  are not eligible  for SBA




assistance.




       All end-of-line pollution control equipment is eligible for federal




and state programs.  However, several programs exclude process changes from




eligibility.  The definition of pollution control as it relates to process




changes is most restricted for IDB, while SBA appears to be the most inclusive.




       The use of many federal and  state financial programs for pollution control




is predicated on the user obtaining certification from a control agency that




the equipment is necessary and adequate.  There is a formalized EPA certification
                                   11

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procedure for SBA assistance and rapid amortization,  and there are informal




certification procedures for IDBs,  FmHA loans and many of the state programs.




       The differences in the above summarized federal programs stem largely




from the different agencies responsible for the programs and from the different




legislation that mandated the programs.




       The diversity of assistance  programs for pollution control is even




greater at the state level because  the programs offered differ from state-to-




state.  The differences in programs among states is  shown in Table I where  ten




state programs exist but five of them have three or  less states participating




and where only one program is offered by all five states.  The table also in-




cludes the various federal programs.




       One of the most common state assistance programs is IDBs which even  though




federally created, must be further  provided for by state legislation.  Other




programs fairly common to the states of Region III are sales and property tax




exemptions and accelerated depreciation for state income tax purposes.   Common




also are the state grant programs which pay for portions of publicly owned




treatment works on top of what the  federal government pays.   In addition, in




EPA Region  III  there is a small water and wastewater  federal  grants program




under the Appalachian Regional Commission which is administered by the states




for those parts of Appalachia within their state.

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I.     INTRODUCTION









       The industrial sector has become a focal point of this nation's




efforts to control pollution.  To carry out this task industry must commit




large sums of money.  There are instances where the commitment to such ex-




penditures poses problems for industry sectors or individual companies.




To alleviate some of the problems, Federal and Region III governments are




assisting industry by providing various tax and financing programs for




pollution control.  The programs vary considerably in regards to eligible




equipment, size users, dollar amounts, and administering agencies.




       All pollution control programs that affect industry, including




agriculture and utilities in Region III U.S.  Environmental Protection




Agency will be described.  Such programs include federal programs as well




as state programs within Region III (Delaware, Maryland, Pennsylvania,




Virginia, West Virginia).








                              Background









       Pollution control expenditures by industry are large.  Their size




can be demonstrated by examining data representing past levels of expenditure




and projections for future expenditures.




       Pollution control expenditures are often expressed in terms of




initial cost, i.e., capital expenditures.  The magnitude of such capital




expenditures for pollution control by industry can be highlighted by a




comparison of national pollution control capital expenditures to national




totals for all other capital expenditures by  industry.   The Department of




Commerce reports the following figures for industrial capital expenditures
                                   1-1

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for new plant and equipment and pollution control.



                               Table II

         INDUSTRIAL CAPITAL AND POLLUTION CONTROL EXPENDITURES

                         (billions of dollars)



                                        1975     1974     1975     1976e

Industrial Capital Expenditures,
  Including Pollution Control1         $100.08   $111.92  $115.49  $119.69


Pollution Control

  Air                                     3.18      3.34     3.79     3.86

  Water                                   1.76      1.88     2.36     3.04

  Solid Waste                             N.A.       .40      .40	.44

  Total                                $  4.94   $  5.62  $  6.55  $  7.34


% of Industrial Capital Expenditures      4.9      5.0      5.8      6.1
Pollution Control Operating and
  Maintenance Costs2'0                    N.A.      3.10     3.66     N.A.
Total Pollution Control Expenditures      N.A.     8.72    10.21     N.A.
e - estimated
N.A. - not available

  Segel, Frank W. and Gary L. Rutledge.  "Capital Expenditures by Business
  for Air, Water and Solid Waste Pollution Abatement,"  Survey of Current
  Business.  Department of Commerece. July, 1976.

  Bureau of Census
2
  Excludes annual depreciation for capital expenditures
                                    1-2

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       A level of 6.1 percent of all industrial capital expenditures




spent on pollution control ($7.34 billion - 1976)  is significant.   The




6.1 percent level is an average of all industries  and does not reveal the




variation within industries and companies.   In several industries  (paper,




stone, clay and glass, steel blast furnaces,  petroleum, chemicals,  electric




utilities and electrical machinery) the percentage of total capital expen-




ditures represented by pollution control ranges from 7-17 percent.   In one




industry, nonferrous metals, the percentage is 24.  At the company level,




many expenditures represent over 60 percent of capital expenditures, and




in some instances over 50 percent of total  asset value.  As another indicator




of its significance, the increase in pollution control capital expenditures




from 1973 - 1976 ($2.4 billion) represents  12.2 percent of the growth in




total capital expenditures over the same period.




       Not to be overlooked when discussing total  pollution control costs




are annual costs for operating and maintaining pollution control systems.




The next to last line of figures on Table II presents those levels  of




expenditures.  The figures show that yearly annual operating and maintenance




costs are approximately 55% of the annual capital  costs.




       Looking to the future, the Council on Environmental Quality (CEQ)




reports two sets of estimates of industrial pollution control expenditures




for the period 1975-1984.  One set estimates the incremental pollution




control expenditures to achieve more stringent levels of control.   The




second, and larger, set estimates total pollution  control expenditures,




including those made before and after the recent major pollution control




laws.  Both of these sets of CEQ cost estimates contain operating  and




maintenance costs.   The figures for industry are:
                                 1-3

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                               Table  III

         INDUSTRIAL POLLUTION CONTROL EXPENDITURES,  1975-1984
  Air

  Water

  Solid

  Radiation

  Noise
  Total
(billions of 1975 dollars)

Incremental
.1 Pollution Control Expenditures $


faste
on

'early Industrial Pollution
Expenditures

iter and Solid Waste
154.5
77.8
68.6
4.5
.2
3.4

15.45
15.09

Total
$ 247.5
116.3
90.4
37.2
.2
3.4

24.75
24.43
       The CEQ data shows that the average incremental annual industrial

pollution control expenditures, including operating and maintenance, is

expected to be 15.45 billion.  This figure is above the Department of

Commerce's 1975 data which shows costs of $10 billion, which include

Bureau of Census Operating and Maintenance costs which, however, might

be low by $3 billion.*
   The Bureau of Census samples pollution control expenditures whereas
   the Department of Commerce samples and then projects expenditures
   to the entire industry.  Both Commerce and Census survey pollution
   control capital costs but only Census surveys 0§M costs.  Based on
   the ratio of Census capital costs ($3.4 billion) to Commerce capital
   costs ($6.55 billion), the Census Of,M cost ($3.66 billion) would
   increase $3.0 billion to $6.6 billion.
                                   1-4

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       Industry bears the initial weight  of all  the  pollution control




costs.  However,  these costs can then be  distributed in  three ways,  or




combinations thereof.









       •   Industry may reduce its profits which,  because of the tax




           structure, results in the owners bearing  approximately 50%




           of the costs and government 50%




       •   Industry may pass along the costs to  the  consumers of its




           products who again may share the expense  with government




           because of the income tax structure




       •   The government may bear still  more of the costs by subsidizing




           the industrial expenditures with programs that either reduce




           the amount of the initial costs borne,  or by  reimbursing




           the company through the tax structure for those costs.









       This manual covers the latter instance in which government bears




some of the costs for pollution control,  in particular.   The first two




means of cost distribution also involve the government but they are




available for industrial expenditures of any type whether pollution  control




or not.









         EPA's Role in Informing Firms of Assistance Programs









       EPA is not required to inform any  company,  impacted or not, of




pollution control financial assistance programs.   EPA does not even  have




the lead administrative role for any of the financial programs that  will
                                    1-5

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subsequently be described.   Moreover,  no single government agency has the




administrative role for all the programs.  EPA's major role in financial




assistance programs is to certify to other agencies that the equipment




under consideration is necessary and/or adequate.




       However, EPA, in acknowledging its concern for the companies




economically impacted by EPA regulations, has named an SBA program coordinator




(Sheldon Sacks, Small Business Section, Water Planning Division - WH-454,




Rm. 801 East Tower, 401 M Street, S.W., Washington, D.C. 20460; 202-755-6023).




He has responsibility for coordinating EPA's role with SBA programs, both




under water pollution control loan programs and general compliance loan




programs.  A publication, Loans to Small Businesses Under the Federal Water




Pollution Control Act, is available from his office.




       Another report entitled Choosing Optimum Financial Strategies -




Pollution Control Systems written by JACA Corp. is available upon




request from EPA's Environmental Research Information Center, Cincinnati,




Ohio  45268.  The report performs net present value analyses for the federal




programs herein described except for Economic Development Administration




and Farmers Home Administration  Loans.









                 Financial Program Description Format









       Each financial program in the federal section will be described




by a standard format.  The state program format will be somewhat abbreviated.




The use of such a format insures complete coverage of the important




descriptive elements of each program.   The format also facilitates the




highlighting of differences and similarities in the financial programs.




The format elements are listed below,  accompanied by a definition.
                                    1-6

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Benefit of the Program








       This quantifies, where possible,  the user's cost reduction and




other benefits permitted by the financial program.  The description does




not attempt to determine nationwide benefits,  although national usage




figures are sometimes given for specific programs.







Eligible Program Users








       This element describes who can legally use the program.  In some




programs, costs or other economic factors preclude some otherwise eligible




companies from using the program.  Such exclusions will be covered.








Eligible Pollution Control Programs








       This element describes which pollution control programs, i.e., air,




water, solid waste, etc. are covered by the financial program.








Eligible Pollution Control Expenditures








       In essence, this characteristic defines pollution control for each



of the above eligible pollution control programs.  The eligibility of




process changes, the effect of by-product recovery and heat recovery are




defined according to their eligibility for the financial program.  Iden-




tifiable waste treatment and end-of-line control equipment is clearly




eligible under all the financial programs herein described and is therefore




not mentioned in each description.  The discussion of eligibility often




centers on equipment which controls pollution and at the same time enhances




a process or equipment which prevents pollutants from being generated.





                                   1-7

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Operating and maintenance costs  are not  eligible for  any of the  financial




programs discussed herein.   (Some argue  that the ineligibility of these




expenses creates an improper bias to capital intensive  pollution control




measures.  It is not the intent  of this  manual,  however, to enter such




discuss ions).







Availability  of Funds









       The  funding  limits,  if any, of the pollution control financial




programs will be  described.









Duration of Program









       The  time limitations, if  any, of financial programs will  be described.




Time  limitations  may refer  to when the pollution control expenditures are




made,  or for  what age plant, or  when the program funding expires.









Utilizing the Program









       Most of  the  financial programs described herein  must be applied




for by the  recipient.   (The one  exception is industrial cost recovery).




Since there are many ways to gain access to the benefits of the  financial




programs the  description will be divided into four parts:









       1.   Certification of pollution control expenditures




       2.   Other  documentation




       3.   Procedures




       4.   Costs

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       1.  Certification of Pollution Control Expenditures









       Frequently, the agency that administers a financial program does




not have the technical expertise to analyze pollution control expenditures



for their adequacy to do  the job,,  necessity to meet  regulations,  or their




inclusion of ineligible equipment.   Therefore, certification  by  the




regulatory agency is often required before an applicant can utilize the




financial program. Certification, in essence, determines that the expen-




diture is eligible for the financial program.   Certification documentation




and procedures will be described in this part  of the format.









       2.  Other Documentation









       This element of the format lists all the  documents and critical




information required by the agency that administers  the financial program.




When available, sample forms will be included  plus the name,  addresses,




and phone numbers of key people or agencies.









       3.  Procedures









       This description will include the sequence of steps  to be followed




by the applicant in applying for the financial program.   When possible,




copies of forms to be used for application will  be included.









       4.   Costs









       Any fees required  to apply for  financial  programs  will be  described
                                    1-9

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in this element.   Occasions will  also  be described when  the  applicant




must also pay for such efforts as title searches,  bond council,  collateral




assessments and so forth.   The manual  will  not,  however,  attempt to describe




the labor costs for the applicant to complete the  application process.






Other Elements
       This will cover such topics as  accounting,  and  miscellaneous rules,




procedures or information regarding the financial  program.








Legislative Reference








       For those users of this manual  who need more  precise legal  information,




this part of the format will provide the legal citations  for the financial




program.
                                   1-10

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II.    FEDERAL FINANCIAL PROGRAMS FOR POLLUTION CONTROL



       Federal financial programs for pollution control can be characterized

as diverse and fragmented.   Most programs were created over a span of eleven

years from 1965 to 1976, though the Farmers Home Administration loans have

their origins in the 1930's before soil  erosion control was called "non-

point source water pollution control" as it is today.

       Because the laws creating the programs have arisen from different

Congressional committees and out of different objectives, there is no single

federal authority which has jurisdiction over all the  programs, and no

attempt has been made to see that everyone's pollution control expenditures

are covered by at least one program.

       Yet, many federal programs have emerged and they do touch many com-

panies and many types of expenditures.   Seven such programs which cover

industrial expenditures will be covered  in this section.  They all provide

industry's pollution control expenditures with benefits not available to

other manufacturing equipment.   The seven programs, along with the dates

after which pollution control was eligible., are:



       •   Rapid Amortization (1969)

       •   Industrial Development Bonds  (1968)

       •   Small Business Administration Direct Compliance (1972)
 SBA loans for companies required to comply with such laws as the Wholesome
 Meat Act and Occupational Safety and Health Act were passed earlier;  1972
 was the first date when loans could be made for compliance with EPA programs.
                                 II-l

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•   Small Business Administration Lease Guarantees  (1976)




•   Economic Development Administration Programs  (1965)




•   Farmers Home Administration and SBA Loans to  farmers  (1930's)




•   Industrial Cost Recovery Systems (1972).

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           Rapid Amortization of Pollution  Control  Equipment



       Rapid amortization is a method for more  swiftly recovering the cost

of pollution control equipment through depreciation than what would other-

wise be allowed.  It was established in 1969  when the investment tax credit

for all new equipment purchases was being repealed.   In fact, one of the

reasons for granting pollution control equipment a  special program was that

the general tax credit was being removed.
                The repeal of the investment  tax  credit,  therefore,
                would have an undesirable  effect  on  the  efforts made
                by private industry to combat pollution  were not
                another type of incentive  to  be made available.
       Although the investment taxt  credit  was  reinstituted in 1971,  rapid

amortization was not terminated.   The  investment  tax  credit was not allowed,

however, for pollution control equipment  on which rapid  amortization was

to be the method of expensing the equipment cost.   The effect of this was

to make rapid amortization unattractive from that point  on except for

a relatively small number of situations.

       The original termination date of January 1,  1975  was extended to
               r-r
January 1, 1976J, without changing other  provisions of rapid amortization.

       However, changes were made by PL94-455,  October 41, 1976 when Congress
 General Explanation of the Tax Reform Act  of 1969,  H.R.  13270,  91st Congress
 PL 91-172 prepared by the staff of The Joint Committee  on Internal Revenue
 Taxation, December 3,  1970,  p.208.

3PL 93-625, January 31,  1975.
                                 II-3

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both extended arid enhanced the rapid amortization of pollution control




equipment.  These changes as well as past provisions of rapid amortization




will be included in the following discussion.








       1.  Benefits of Rapid Amortization








       Prior to the Congressional changes of 1976, rapid amortization




was used in relatively few situations,  and therefore, was of little bene-




fit to industry.  The reason for its lack of used was the mutual exclusivi-




ty of rapid amortization and the more beneficial investment tax credit.




The value of the investment tax credit is largely attributable to its




being an absolute reduction in taxes rather than an acceleration of




deductions.



       The period of rapid amortization is 60 months for the value associated




with the first fifteen years of useful life of the equipment.  For example,




consider equipment with a 20 year useful life.  The value for the first




fifteen years, i.e. three-fourths can be rapidly amortized.  The remaining




one-fourth has to be depreciated by a traditional method; however, the




depreciation on the remainder begins in the first year, not the 16th.




       The recent Congressional provision permits one-half the investment




tax credit  (i.e., 5 percent)with rapid amortization.  As a result rapid




amortization is more attractive to industry than heretofore though not




universally so.  Using net present value analysis, it can be shown that




rapid amortization is attractive only at very high discount rates or when




the equipment would otherwise have a useful life greater than twelve years.




       Figure 1 is a plot of sets of conditions that separate the attractiveness
                                 II-4

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-------
of rapid amortization and the  most  accelerated  traditional way of  depre-




ciating equipment (double-declining balance  in  the  first year taken  with  the




investment tax credit and sum-of-the-years digits for  the remaining  years




of useful life).   As the solid line of the graph shows, at the generally  high




discount rate of 15 percent, the useful life of the equipment must be approxi-




mately eleven and one-half years before rapid amortization is attractive




(seventeen years under former  conditions as  shown by the broken  line).  At a




10 percent discount rate, rapid amortization is attractive after 15  years.




The solid line separates the attractiveness  of  rapid amortization  and tradi-




tional appreciation for current conditions as a result of the Tax  Reform Act




of 1976.  The broken line shows where that line of  separation was  under former




conditions.









       2.  Eligibile Program Users









       Any company is eligible to use rapid  amortization.









       3.  Eligible Pollution  Control Programs









       Air and water pollution programs are  definitely eligible  for rapid




amortization.  Solid waste pollution, to the extent it is  connected with




air or water pollution control, is also eligible.   The statute  allows




"depreciable property used to  abate or control  water or atmospheric pol-




lution or contamination by removing, altering,  disposing,  storing or




preventing the creation or emission of".









       4.  Eligible Pollution Control Expenditures









       Expenditures eligible for rapid amortization must be made for a
                                  II-6

-------
plant that was in operation prior to December 31,  1975.   Therefore the




intent of rapid amortization is to assist  existing plants.




       The costs of a treatment facility that serves  parts  of a plant con-




s'tructed after 1975 as well as parts constructed prior to or during 1975




must be apportioned appropriately, for rapid amortization purposes.   Like-




wise, costs must be apportioned for equipment which both controls  pollu-




tion and performs another function.




       The investment tax credit provision is for  expenditures that occur




after December 31, 1976.




       Process changes which include changes that  avoid the creation or




emission of pollutants are now eligible for rapid  amortization. The




eligibility of process changes is recent,  i.e., January 1,  1976.   Former-




ly, only end-of-line treatment techniques  were acceptable.




       A process change is eligible as long as it  "does not significantly




[greater than 5 percent]  increase the output or capacity, extend the useful




life, or reduce the total operating costs  of such  plant or  other property"




or "alter the nature of the manufacturing  or production process or facility".




       Allowing process change equipment to be eligible appears expansive,




but the restrictions just quoted are significant enough to  dampen  the




effect of this change.  The restrictions are in some  ways more severe




than what is allowed by the IRS for industrial development  bond financing.




Under IDBs in those instances when the process change  did extend the useful




life of equipment, a fraction of the cost  of the new  equipment is  eligible




for the benefit.  The fraction  is determined by taking the remaining use-




ful life of the old equipment and making a fraction by placing that over




the new useful life (or capacity) and applying the fraction to the new




equipment cost.  In addition, a significant increase  in capacity for IDBs
                                II-7

-------
means greater than 20 percent.




       Not affected by the Tax Reform Act of 1976 was another limitation on




the amounts eligible for rapid amortization.  The cost of equipment other-




wise eligible for rapid amortization must be reduced by the net value of




products recovered by the pollution control  equipment and sold to others.




There is no reduction to the costs eligible  for rapid amortization when the




by-product recovered is returned to the process.




       Net value means the sales revenue from the product minus the expense of




selling and operating and maintenance expenses connected with the by-product




sale.  Depreciation or amortization is not considered an eligible expense




to include when determining by-product recovery value.




       The net value to be deducted from the cost that  is rapidly amortized




consists of each year's net value for the useful  life of the equipment.




The useful life is the shortest period authorized under Section 167 of the




Internal Revenue Code.








        5.  Availability of Funds








        There  is no  limit  to the use  of  rapid  amortization.








        6.  Duration of Rapid Amortization








        Rapid  amortization is now  a permanent  provision of the tax code.




 As explained  earlier,  the first  legislation set  a time limit of January 1,  1975




 which was subsequently extended  by additional legislation to January 1, 1976.




 The legislation signed in October, 1976 made  rapid amortization a permanent
                                 II-8

-------
tax program for pollution control equipment.









       7.  Utilizing Rapid Amortization








       The steps in applying for rapid amortization are few and straight-




forward in relation to other financial programs.








       Certification.  For a company to use rapid amortization for tax




purposes, it must obtain certification from the Environmental Protection




Agency (EPA).  In turn, the EPA must have certification from the appropriate




State(unless EPA is the enforcer) that the facility is in conformity with




the State program or requirements for abatement.   Copies of EPA and state




forms for certification are included herein as Appendix A.








       Other Documentation.   The applicant should determine what permits,




notifications, etc. are required from the appropriate state or federal




control agency.  The State may not be able to certify the equipment to EPA




unless the applicant has done all that is necessary to satisfy other State




procedural requirements.








       Procedures.   The applicant or taxpayer can obtain rapid amortization




certification forms from EPA Regional offices.  The state certification




form is part of the forms package.  The applicant should submit the state




form to the state for completion and forwarding to EPA.  The remainder of




the forms should then be completed by the applicant and submitted to EPA.




       Upon EPA approval the taxpayer must attach a copy of the certified




application to its  tax return.
                                 II-9

-------
       Costs.   There are no  costs charged by EPA for certification or any




other feature  of rapid amortization.








       8.   Other








       The additional first year's depreciation of 20% of the equipment




value or a maximum of $2,000 (20% x $10,000)  is available with rapid




amortization under certain conditions.   If the deduction for rapid amor-




tization begins in the tax year following installation of the equipment




(instead of beginning the next month),  then the additional first year




depreciation can also be taken.




       Rapid amortization can be used  for pollution control equipment re-




gardless of the depreciation methods used for other plant equipment and




property.




       An election can be made by the  taxpayer to discontinue rapid amor-




tization.   At any time a copy of the original EPA certification should be




filed with the proper notification to  the IRS.  Once terminated, the tax-




payer can use any other depreciation method,  but cannot return to rapid




amortization.








       9.   Legislative Reference








       Section 169 of the Internal Revenue Code is the regulation governing




rapid amortization of pollution control facilities.
                                 11-10

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                                 Section B

                      Industrial Development Bonds (IDE's)



       Industrial development bonds have been used for over forty years by

state, local governments, and quasi-governmental authorities (collectively

called municipalities) to finance industrial projects that serve a public

purpose such as increased employment.   In 1968,  the definition of public

purpose was expanded by Congress to include industrial pollution control

equipment.

       From a modest beginning of $88 million in pollution control IDB

financing in 1971, the amount had increased to $2.05 billion in 1976 (Table

IV).  In 1976 such a level of financing represented 6.1% of all municipal

bonds issued and 27.9% of all pollution control  capital expenditures.

       The above figures on pollution control IDB financing represent muni-

cipal issues publicly sold to institutional and  individual investors.   Addi-

tionally, IDBs are issued on a private basis to  institutional buyers such as

commercial banks and insurance companies.  The dollar volumes of IDBs sold

privately are not recorded centrally;therefore the numbers above are under-

stated by what many consider to be significant amounts.

       IDBs, pollution control or otherwise, are  long-term securities which are

issued in a municipality's name for the benefit  of a particular company pro-

ject.  Typically, it is the revenue from the project which provides interest

and principal repayments to the municipality which in turn pays the bondholders.

Because no municipal revenues are imrolved, and  because the municipality doesn't

guarantee payment upon default, the bonds are often referred to as revenue bonds.

(If the municipality itself is responsible for their bonds, they are called

general obligation bonds.)
 The figure for pollution control capital expenditures,  $7.34 billion was
 based on the Department of Commerce's 1976 estimates.
                                 11-11

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       Tax-free IDBs used for job creation purposes  (i.e.  industrial develop-




ment) can only be issued for up to $1 million per issue,  or $5 million per




project.  Tax-free pollution control IDBs  have no such dollar limitations.




The $1 million limitation for job-related  IDBs is for any and every project




of a company.  A company can obtain up to  $5 million if project capital expen-




ditures within plus or minus three years of the IDE  financing do not exceed




$5 million.




       Pollution control IDBs are used by  the very credit-worthy corporations,




which are typically large corporations.  The smaller credit-worthy corporations




tend to use privately placed pollution control IDBs.   Many small credit-worthy




companies do not have access to IDBs unless their state has a special IDE program.




       The benefit of IDBs are long-term financing and interest costs that are




lower than what are generally available for companies.  Since interest on munici-




pal bonds is tax free to the bondholders,  the interest rates in the IDE market are




lower, usually by 2-3 points, than equivalent corporate bonds.








       1.  Benefits of IDBs








       The benefits of pollution control IDBs can be demonstrated by two




financial tools,  as shown in the following example analyzing a $100,000 pollution




control investment.  A comparison of net present  value (NPV) and short-term




cash flow (first 3 years after project)  will be made for  a tax-free and taxable




long-term (18 years) bond.
                                11-13

-------
                                                           Short Term
                                    NPV                     Cash Flow

       6%,  18 year IDE         -$32,510                  $+8,391

       8%,  18 year             -$39,343                   +5,770
             taxable bond
       The NPV of the IDB is 82.6% that of the taxable bond,  and the cash

flow of the IDB is 1.46 times that of the taxable bond.   (The cash flow

is still positive after three years because of the investment tax credit

and depreciation).

       An additional benefit of IDBs to corporations  is flexibility in

principal repayments schedules.   Many IDB issues for  larger corporations

have deferred principal payments whereby only interest is paid for the

first five to eight years and then principal payments begin yearly, perhaps

with the largest principal payment in the last year.

       Another benefit of pollution control IDBs to corporations is the

tax exemption for property whose title is in the name of the municipality.

       An additional benefit of pollution control IDBs is that some proceeds

of the issue can be used for other than pollution control purposes.  The

tax regulations require that substantially all of the proceeds of the bond

issue must be used for pollution control.  Substantially means 90 percent.

Assuming the company can accurately estimate their pollution control needs,

they can issue the bonds for 10 percent more than they need and use the ex-

cess for other purposes.

       The above benefits only apply to those expenditures which the In-

ternal Revenue Service defines as pollution control.   In mid-1975, the In-

ternal Revenue Service promulgated revised regulations which define pollu-

tion control equipment for industrial development bond financing and which
                                 11-14

-------
allocate its costs where the equipment alsoperforms a function other than




pollution control.  Wherever allocation occurs, the benefits accrue only to




the pollution control portion.  The allocation provision is explained below




in element 4.









       2.  Eligible Program Users









       The tax laws which permit tax-free IDBs for pollution control do




not exclude any companies from using IDBs.   The federal law, however, does




not automatically make the program available for all companies.  First, in-




dividual states must pass legislation, in accordance with IRS Section 1.103,




declaring that pollution control is for a public purpose.  Such a step is




necessary because the tax-free bond market can only be used for projects




which are declared to serve a public purpose.   To date nearly all states




have taken the declaratory step for pollution control projects.  Washington




State has not taken such a step.




       Although all companies are entitled to use IDBs, the practical use




of the market is limited to large and/or credit-worthy firms.  A second




limitation for eligible users is that the administrative costs of obtaining




IDBs effectively create a minimum amount that is practical for the use of




IDBs.




       The vast majority of IDBs are offered for sale on the public bond




market.  Therefore, the name and reputation of a company is important for




attracting potential investors.  Large companies generally have the most




well-known names and reputations.  Along with the reputation, potential in-




vestors examine the credit-worthiness of the company from their own analysis,




or rely upon a rating from one of the bond-rating agencies.
                                 11-15

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       Smaller  but nevertheless credit-worthy companies also have some




access to IDBs.  These transactions of IDBs are usually private placements




because they are sold privately by the company to one or more banks or in-




surance companies without going through a public market.  Private placement




has the advantage of lower administrative costs.




       Publicly placed IDBs involve large pollution control expenditures




because the interest expense saved by using an IDE must be significant




enough to be greater than the administrative costs of IDBs, such as  bond




council and printing costs.  Of the 720 publicly placed bond issues from




1971 through 1976, only 6 (or l%)were $500,000 or less, and 33 (or 5%) were




$1,000,000 or less.  The dollar average  publicly placed pollution control




issue for the last three years has been:








                          1974     $14,583,982




                          1975     $11,057,689




                          1976     $12,238,770








       Privately placed IDB issues are in substantially smaller dollar




amounts.  In some states the amounts can be as small as $25,000 - $50,000



though they are typically greater than $100,000.  The lower ceiling for




private placements is often a function of the size of the fee charged by




the municipality for approving an IDB.








       3.  Eligible Pollution Control Programs








       Air, water, and solid waste pollution control expenditures are eli-




gible for IDBs.  Occupational Safety and Health expenditures are not.  The




definition of air pollution includes radioactive materials control.
                                 11-16

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       4.   Eligible Pollution Control Expenditures









       IDE financing can be used for end-of-line pollution control equip-




ment and for process changes which control pollution, to the extent that




they do not serve other purposes.  Regulations pertinent to eligible expend-




itures are listed below, several followed by examples:









       •   "The property must in whole, or in part, abate or control




           water or atmospheric pollution or contamination by remov-




           ing, altering, disposing or storing pollutants, contaminants,




           waste or heat."  The term pollutant only applies to materials




           or heat discharges which definitely result in water or atmos-




           pheric contamination.  This definition excludes "the release




           of materials or heat which would endanger the employees. .  .




           in which such property is used," as determined, for example,




           under the OSHA program.




       •   The property must be "of a character subject to allowance for




           depreciation ... or land."




       •   "The jurisdictional agency must certify that the facility,  as




           designed, is in furtherance of the purpose of abating or con-




           trolling pollutants, or the facility will meet or exceed the




           appropriate regulations in effect at the time of issuance."




       •   Property does not qualify if it is used to avoid the creation




           of pollutants.   For example, the installation of a new boiler




           which reduces pollution by more efficient combustion than the




           replaced boiler does not qualify.  Likewise, equipment that re-




           moves potentially polluting sulfur from fuel does not qualify.




           However, equipment which handles or treats the removed sulfur




           does qualify.
                                 11-17

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       •   Property does not qualify if it processes  material  or heat




           that was a pollutant,  but is not upon reaching the  process




           in question.   The property must be "a unit which is discrete




           and which performs .  .  .  one or more of the (pollution control)




           functions. .  .  and which  cannot be further reduced  in size




           without losing one of such characteristics."   For example,




           consider pollutants converted in a first step to a  nonpollutant




           chemical which is subsequently processed to make it saleable.




           The equipment of the first step qualifies;  equipment in the




           subsequent steps does not qualify.  The equipment in the first




           step is the smallest unit of property which functions to control




           pollution.  In addition,  by the time the material reaches sub-




           sequent steps it is no longer a pollutant.




       •   Property also does not qualify if the polluting materials were




           customarily controlled for other reasons.   For example,  a water




           system which  discharges heat from cooling  a turbine does not




           qualify since turbines require cooling to  operate at peak effic-




           iencies.








       In addition to the above tests, an exempt issue requires that 90




percent or more of the proceeds must be used for pollution control equip-




ment.  Therefore, up to  111 percent  of the pollution  control costs, if




exactly known, may be borrowed.




        The second major component of the regulations concerns the allocation of




property costs which control pollution and those which serve a purpose other than




the  control of pollution, such as a  process change.  Allocations are necessary




since it is only the cost of the pollution control portion which qualifies
                                 11-18

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for the financing.  The following ratio should be applied to the property




cost to determine what costs do not qualify:




                                     Y
                                   C + E




where Y = present value of estimated economic benefits to be realized over




          the life of the equipment, such as "gross income or cost  savings




          resulting from any increase in productivity or capacity, produc-




          tion efficiencies, the production of a byproduct, the extension




          of the useful life of other property.  .  . (and) savings resulting




          from the use, reuse, or recycling of items recovered."




      C = present value of payments (excluding interest and minus salvage




          value)for acquiring the property, i.e.,  capital costs.




      E = present value of all expenses, including interest, incurred during




          the operation of property.




Present values as an IRS rule are computed using a 12-1/2 percent discount rate.








       5.  Avai1abi1ity of Funds








       For those eligible to use IDBs and who have the credit status and




size expenditures generally required,  IDBs are generally available.     The




federal statutes for IDBs do not set any budgetary or time limits.  However,




a possible source of concern regarding availability is in the IDE bond buy-




ing market.   In this regard, two observations are  pertinent:








       •   Some normal buyers of IDBs, such as,  commercial banks and




           insurance companies have limits on the  extent of tax-exempt




           income they can receive
                                  11-19

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       •   Criticism that IDBs drive up the cost of other municipal




           borrowing could bring future legislation.




       The implication of the first statement on IDB availability is that




a company may on occasion not be able to use their primary bank as an IDB




financing source.  The company may then have to approach other banks per-




haps not as familiar with a company's financial position.  The implication




of the second statement is not real at this time, in that it is only a




threat that Congress could take away the IDB privilege for corporate pollu-




tion control expenditures.  A report by the Twentieth Century Fund Task




Force on the Municipal Bond Market concluded that pollution control IDBs




have increased municipal borrowing costs by 10-20 basis points.  This in-




crease for the entire bond market means municipalities are paying an addi-




tional $30-60 million in interest costs on other more traditional uses of




bonds (for schools, sewers, parks, etc.).








       6.  Duration of IDBs








       There are no time limits by which IDBs have to be issued before




benefit expires.  However, as just indicated, pressures could develop in



the future to eliminate the tax-free privilege for corporate pollution con-




trol expenditures, because of the effect of IDBs on municipal borrowing




costs.








       7.  Utilizing IDBs








       The steps that a corporation takes in obtaining IDBs are several,




many of which are quite complex.  The costs of these steps can also be
                                 11-20

-------
substantial, as witnessed by the statistics given earlier concerning  mini-

mum size issues.

       A type of certification is required for the bond buyers of pollution

control IDBs.  In addition, an investment banker must be obtained to sell

publicly placed IDBs.  An agreement also has to be established with the

municipality for the bond issuance.  Frequently, the municipality will re-

quire certification from the appropriate control agency before an agreement

is written with the company.



       Certification.  A pollution control IDE must be certified as being

for pollution control equipment, eligible for tax-free financing.  Independ-

ent bond councils provide such certifications.  Internal Revenue Service

regulations specify that:
           property is a pollution control facility if...either
           (A) a Federal, State or local agency exercising juris-
           diction has certified that the facility, as designed,
           is in furtherance of the purpose of abating or con-
           trolling atmospheric pollutants or contaminants, or
           water pollution as the case may be, or (B) the facil-
           ity is designed to meet or exceed applicable Federal,
           State or local requirements for the control of atmos-
           pheric contaminants, or water pollution, as the case
           may be, in effect at the time the obligations, the
           proceeds of which are to be used to provide such fac-
           ilities, are issued.
       Certification is in the form of a statement to the bondholders that

their interest income will be tax-free.   This statement is usually made by

a law firm, serving as the bond council.  The bond council can make this

statement with or without obtaining a specific IRS ruling on the issue.  To

make a statement without a ruling requires that bond council is assured,
                                  11-21

-------
from its knowledge of all applicable regulations,  that the interest income




is tax-free.  Should this not be the case,  after the issue is sold, the




corporation is responsible for compensating bondholders for the taxes paid.




       For the majority of pollution control IDBs,  bond council obtains




a ruling from IRS.  This is especially appropriate  when  process changes




are part of the pollution control plan or  when  some economic benefits




(perhaps by-product recovery) occur in the  project.   As explained earlier,




complicated formulae exist for apportioning the cost of equipment for IDE




purposes where the equipment serves a purpose other than pollution control.




Certification is required for issues either publicly or privately placed.








       Other documents.  It is common for a municipality to require that




an agreement, referred to as a bond resolution,  be  adopted between it and




the benefiting company.  The nature of this agreement is to specify the




amounts involved, the purposes, approval for issue  by the municipality,




the liabilities and obligations of each party,  etc.   Bond resolutions are




required for publicly or privately placed issues.




       One of the key aspects of the bond resolution is the type of fin-




ancial transaction that exists between the  company and the municipal au-




thority.




       The interest and principal repayment schedule utilized by the bor-




rower  is often similar to many bond indentures.  That is, equal interest




payments are paid each year, but the borrower pays different amounts of




principal into a type of sinking fund during the life of the financing.  The




sinking fund plus earned interest is used as the repayment source at the end




of the term of the financing.  As is typical in most situations, there is




a lien on the property being financed and/or a guarantee by the borrower.
                                 11-22

-------
At the end of the financing period, the borrower purchases the facility




from the authority at nominal consideration, which must be less than fair




market value.  The borrower is treated as the owner for tax purposes during




the financing period, even though legal title is in the authority.  The




borrower can take depreciation and investment tax credits.




       It is also possible for the relationship between the governmental




authority and the industry to be structured as an ordinary financing lease,




with lease payments deducted by the business as rental payments.  In this




case, the lessee does not have the privilege of taking depreciation and




the investment tax credit.  The payments would be even over the lease life.




The authority retains title at the end of the financing.  This relationship




does not occur often because of difficulty in meeting true lease tests,




which require that a certain percentage of value remain at the end of the




lease and that the equipment be capable of being sold to someone else.




       Another possibility is to establish the relationship as an install-




ment sale with title going to the buyer at the end of the installment period.




This system would have equal payments and allow the purchaser to take depre-




ciation and the investment tax credit.




       The last method is for the government agency to issue a bond, the




proceeds of which are reloaned to several companies.  Each company negoti-




ates its own terms and signs % loan agreement or note.  The borrower is en-




titled to depreciation and the investment tax credit.









       Procedures.    Step-by-step procedures do not exist for obtaining




IDBs.   Hoivever,  certain steps must be performed before others.   Certification




of equipment by the appropriate pollution control agency will be a likely




step before the bond council's statement  can be made or before a bond
                                11-23

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resolution could be established with the municipality.   While these steps




are taking place, the company may wish to determine whether they will under-




take a public or private issue.   A private issue with a bank, for example,




has the disadvantage of being for a shorter period than that that is likely




under a public issue.  On the other hand, it has an advantage for a company




of reserving use of the public market for equity issues,  perhaps of larger




amounts.









      Costs. Earlier it was mentioned that the total costs included in pub-




licly placed IDBs were large enough to require expenditures typically




greater than $500,000.  It is at this level and above that the interest




savings are greater than the administrative costs.   The expenditures amount




is typically less for privately placed issues.




       The categories of costs encountered are as follows:









       •   legal costs of bond resolutions




       •   legal costs of bond council




       •   certification costs




       •   legal and administrative costs for developing a prospectus/




           official statement for a public ifcsue




       •   bond printing costs for a public issue




       «   sales costs for a public issue.







       8.   Legislative Reference









       All  federal regulations pertaining to pollution control  IDBs  are




contained  in  IRS regulations, Section 103(c).  Each of the 49 states that
                                    11-24

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allow pollution control IDBs has its own regulations with which a company




needs to be familar.  In addition,  the municipality with which a company




is working likely has another set of applicable  regulations.
                                  11-25

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                               Section C
        SMALL BUSINESS ADMINISTRATION DIRECT COMPLIANCE  LOANS

       The Small Business Administration  (SBA)  has  been  granted specific
lending authority by Congress for making  pollution  control loans to eligi-
ble small businesses.  These loans will be referred to here as compliance
loans.  Qualifying under such loans are air, water  and solid waste programs
in addition to OSHA, Mine Safety and wholesome  food programs (i.e. eggs,
meat and dairy).  Process changes and end-of-line controls are eligible
for these loans.  Eligible companies must meet  SBA's small business size
limit requirements and must be likely to  suffer substantial economic in-
jury from compliance  without such assistance.
       The special characteristics of SBA's compliance loan program are
that 1) the funds come from SBA's disaster loan program, 2) more direct
loans are available, and 3) the loans can be for longer  terms than other
SBA loans.  These characteristics must be clearly understood because it
is also possible that companies could get pollution control financing
under the less favorable traditional programs of SBA.
       SBA has always provided loans to businesses  if such loans were
not available through normal banking channels and if the applicant met
SBA business size and risk requirements.   Such  funds are provided in three
ways:  by the SBA guaranteeing a portion  up to  90 percent of a bank loan;
by participation, in which case the SBA provides a  part  of the funds and the
rest is provided by the bank; and by direct loans,  in which case the SBA
provides funds on a direct loan basis. All of  these so-called regular
business loans have typical repayment periods of up to 15 years.  Direct
loans have considerably lower rates than  the participation rate or the
guaranteed rate; however, such direct loans are frequently not available.
                                  11-27

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       Thus the advantages of the special compliance loans are availability




of mpre direct loans, the lower rate of direct loans,  and their longer term




(up to 30 years).




       The authority for SBA to make air, water and solid waste pollution




loans was provided by Congress in two steps.








       Water Pollution Control Loans.  The 1972 amendments to the Federal




Water Pollution Control Act (FWPCA) legislated that $800 million to be made




available under SBA to small businesses for water pollution control capital




expenditures providing the company is substantially injured.  The program




has been operating since August 1974.  An important part of the law that it




is necessary for an applicant to obtain a certification from the appropriate




regional office of EPA stating that the equipment is "necessary and adequate"




to meet FWPCA regulations.




       A Company qualifies for SBA water pollution control loans if it is a




"small business concern . . . affecting additions to or alterations in the equip-




ment, facilities (including the construction of pretreatment facilities and




interceptor sewers) or methods of operation of such concern to meet water




pollution control requirement ... if such concern is likely to suffer




substantial economic injury without assistance."








       Compliance Loans for Other Regulations.  In January 1974, the President




approved legislation permitting SBA to make loans to any small business concern




required to "meet requirements imposed on such a concern pursuant to any




Federal law," or any state law enacted in conformity with the federal law.




This legislation unified several earlier enactments (except for water pollution




control) which had established specific loan programs for each regulatory
                                 11-28

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program.  Under the new legislation,  SBA can now provide a loan to any
eligible company for compliance to any federally-imposed standards (except
for water pollution control) which require alterations in its plant,  facilities,
or methods of operation.


       As to the volume of compliance loans already granted, the following
statistics were provided by SBA through December 31, 1976.
                                   Numbers     Total Amount     Average Amount
       Air Pollution Control Loans    65       $11.6 million     $178,500
       Water Pollution Control Loans  51        13.7 million      268,600


       It is important for companies to know that SBA does not advertise
or promote compliance loans.  In fact, EPA has received more certification
requests for SBA loans from businesses and their Congressmen than it has
from SBA.  In addition, many bankers are unaware of these special compliance
loans, and instances have been known where SBA loan officers in district
offices did not know of these programs either.  Therefore, potential
borrowers should not be deterred in their search for the proper SBA person
in an office in charge of these loans.
       EPA initially publicized the existence of SBA loans through press
releases.  EPA Washington has requested the regional offices to mail notices
of loan programs to all NPDES applicants, but Region III has not done so,
primarily because of staff limitations that preclude prescreening the
recipients for SBA size qualifications.
                                  11-29

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       In Maryland,  seminars were held,  with SBA's  help,  to  publicize  the




water loan programs  (though not for air  loans).   In Pennsylvania,  the




state Commerce Department is alerted about any company in violation of environmen-




tal regulations; the department then sends the company a  packet of information




about financial programs, including SBA  loans.  There are apparently no




publicity efforts undertaken in the other states of the Region.











       1.  Benefits of SBA Compliance Loans








       The benefits to a company of direct SBA compliance loans are long




repayment terms and low interest rates.   Such benefits are in comparison




to bank loans or in comparison to traditional SBA guaranteed loans.




       Table V illustrates the benefits  of SBA direct compliance loans




measured by net present value (NPV) and  short term cash flow impacts.




The illustration covers a $100,000 pollution control expenditure.    The




NPV calculations included a ten year useful life, double-declining de-




preciation, 10 percent investment tax credit and additional first year




depreciation.  Short term cash flow impacts cover the first three years




useful life.  The NPV of the 7% 10 year  SBA direct loan is 80.3% that  of




the 12% 10 year bank loan, and 83.9% that of the 11% 10 year SBA guaranteed




loan.  The short term cash flow benefits are even greater, $40.9% and




46.4% respectively.
                                   11-30

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                               Table V

              SMALL BUSINESS ADMINISTRATION COMPLIANCE LOANS
  Loan Type
7%, 10 year,  SBA
Direct Loan

11%, 10 year, SBA
Indirect Loan

12%, 10 year
Bank Loan
         NPV
           % of bank
  Value    loan amount
-$47,460     80.3°
-$56,545     95.7%
                Short Term Cash Flow
-59,098
100%
                                                        Value
                 +$4,341
                 +9,346
+10,601
                                % of bank
                                Loan amount
                  40.9%
                  88.23
100.03
       2.  Eligibile Program Users



       Three elements are necessary for companies to be eligible for SBA

compliance loans:  1)  the company must be conforming with pollution control

requirements that are pursuant to a federal law, 2)  the company must meet

SBA's size limit requirements, and 3)  the company must be substantially

injured.  Further details of each element are explained below.

       Concerning the first, SBA has determined that compliance with state

or local regulations which were not required by federal regulations or laws

is not eligible for SBA's compliance loans.  Thus, a company must be doing

something that can be directly traced to requirements of, for example, the

Clean Air Act of 1970 or the Federal Water Pollution Control Act amendments

of 1972.

       Regarding size, SBA has specified limits for each Standard Industrial
                                11-31

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Classification (SIC).   The limits can be obtained from all  SBA offices




(Appendix C).   The limits are expressed in number of employees for manu-




facturers and mining,  and in dollar volume of sales  for wholesale or re-




tail firms.   The limits are obtained from an average of a pay period in




each of the previous four calendar quarters.   Thus,  companies with seasonally




high employments are not penalized by their peak needs for  employees.




       SBA also has a procedure for determining number of employees  when




a company does business in more than one SIC and when  each SIC has been




assigned a different employee size limit.  The percentage of total business




in  each SIC  is  multiplied by the employee size limit of  its correspond-




ing SIC.  The sum of the results for each SIC are then added to find a size




limit to which a company's actual level is compared.




       The size limitations should definitely be checked because many




companies are surprised to discover how large a  ''small" business  is.




       The showing of substantial injury (the third  element of eligibility)




is demonstrated by the company's inability to obtain conventional financing.




Inability can mean the lack of sufficient collateral, interest rates that




would cause losses for the company,or too short a repayment term.  A letter




of financing refusal or a letter of the best financing offer from a bank




is enough to demonstrate inability to obtain financing.








       3.  Eligibile Pollution Control Programs








       The SBA loan authority extends to all compliance programs which are




created pursuant to federal law.  A small business that is  complying to




a state law which was not required by federal law would not be eligible
                                  11-32

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 for loan funds from SBA's compliance loan program.  The small business




 may, however, be eligible for a regular small business loan.  (It should




 be kept in mind that such a loan will have shorter repayment periods and




 may not be as readily available as compliance loans).




       An example  of state  laws  passed  where  there is  not  corresponding




federal law is noise pollution.   The  federal  government has  some  noise  con-




trol regulations  for airplanes,  motorcycles and  trucks and new equipment,  such




as construction equipment.   The  federal government does not  have  a program for




controlling what  is commonly referred to as community noise,  or noise across




property lines from existing sources.   Should a  community  control such noise,




as a few communities have,  complying  small businesses would  not be eligible




for SBA's compliance loans.




       Another example of expenditures pursuant  to state  law requirements




which are not eligible for SBA financing occurs  when the  laws of aggressive




 states affected companies prior to the enactment of the major federal bills




 such as:









           Clean Air Act of 1970




           Federal Water Pollution Control Act of 1972




           Occupational Safety and Health Act of 1970




           Wholesome Meat Act of 1967




           Consumer Product Safety Act  of 1972




           Emergency Petroleum Act of 1973









       Even if the expenditures  were  pursuant to earlier  federal  laws,




they are not eligible because SBA has specified  particular amendments




to air and water acts,  thus  eliminating projects from eligibility if




they were in compliance with regulations that came from earlier laws.
                                 11-33

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        4.   Eligible Pollution Control  Expenditures








        Eligible compliance expenditures  for air  compliance  programs  must




 have occurred after January 1974 and for water pollution control  after




 October 1972.




        Process changes and end-of-line equipment that  reduces  or  controls




 pollution are both eligible for  SBA compliance loans.   The  wording of




 the blanket law which covers all compliance programs,  other than  water




 pollution control, specifies that it is  "to assist  any small business con-




 cern in effecting additions to or alterations in its plant, facilities,




 or methods of operation to meet  requirements".   Similar working is found




 in the Federal Water Pollution Control Act of 1972  for SBA  water  pollution




 control loans.




       SBA is supposed to adjust  loan amounts downward  for pollution  control




expenditures that have economic benefits  such as  by-product  recovery  or




that expand the useful life or capacity of the plant.   However, the SBA does




not appear to strictly follow this rule.




        SBA can also provide compliance loans for working capital  replen-




 ishment.  This occurs when funds were  spent by the  company  for pollution




 control and not previously financed in any way.




        Companies that are creditworthy and have  expenditure requirements




 greater than $250,000 may be channeled by SBA into  the lease guarantee




 program (see Section D below).








        5.  Availability of Funds








        The funds for all compliance loans are  supplied from the SBA disaster
                                11-34

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loan pool which is separate from the source that supplies regular small




business loans.  The disaster loan pool funds more than compliance loans;




therefore, compliance projects compete for funds with natural and economic




disasters.




       The fiscal 1977 disaster loan budget was $50 million.




       In theory, the funds for water pollution control are supposed to be




separate from and considerably larger than the disaster funds for all other




compliance loans.  The theoretical basis for separate funds lies in the 1972




amendments to the Federal Water Pollution Control Act.   Those amendments




authorized $800 million for water pollution small business loans.  No legis-




lation for the other compliance loans established such a funding mechanism.




This funding situation was one of the reasons why water pollution control loans




could not be consolidated with all other compliance programs and covered under




one section of SBA law.  However, although the $800 million was authorized,




it has yet to be appropriated for SBA's use,  and therefore water pollution




loans actually come out of disaster loan funds.




       The answer to the question of adequate availability of loan funds




for complying small businesses is difficult to determine for three reasons:




1) the competition of compliance with major disasters;  2) the fact that the




$800 million, although authorized for water pollution control,  is not actually




appropriated for SBA to use;  and 3) the way in which the disaster loan funds




are replenished from time to  time.   Regardless of these indicators, however,




there is inadequate data on the demand side of the supply-demand equation for




SBA compliance loans.   This makes it difficult to determine whether or not




the loan supply funds, although restricted, are nevertheless adequate.
                                 11-35

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       6.  Duration of Program









       The SBA legislation for compliance loans contains no time restric-




tions for such loans.   Practical duration seems to be most influenced




by fund availability and loan demand.   The disaster loan pool,  from which




water pollution and all other compliance loans are made, is periodically




replenished by loan repayments, Congressional  legislation and Office of




Management and Budget  control.  Loan demand is very unpredictable.   The




interaction of two such unpredictable sides of the demand-supply equation




make future duration  of the compliance loan program indeterminate.









       7.  Utilizing SBA Compliance Loans









       Obtaining an SBA loan is typically a complex and time consuming




activity.  Several parties can be part of an SBA loan transaction,  namely,




a bank, a pollution control agency, other regulatory agencies,  and  SBA.




The procedures for SBA compliance loans take longer than those  of SBA




regular business loans since the latter do not involve regulatory agency




approvals.




       The general steps for obtaining SBA compliance loans begin with a




bank turndown of a financing request.




       Secondly, a company should establish with SBA that it is a small




business and discuss in general terms the compliance loan program.   Third,




the company will be required to obtain certification from the appropriate




regulatory agency(ies).   Fourth, the company completes its application




for SBA.
                                  11-36

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       Certification^   The SBA laws  are very specific  as  to  the  requirement




that EPA certifies water pollution control  loans.   The certification by




EPA must say that the  equipment is necessary and adequate.   Certification




can be provided' by EPA or the state,  if it  has  been granted  certification




authority by EPA.




       Appendix B contains EPA's certification  regulations.   Instructions




for EPA's certification are contained in a  brochure called  "Loans To Small




Businesses Under The Federal Water Pollution Control Act  (92-500)'!  This




is  available from Sheldon Sacks,  Small Business Section, Water  Planning




Division-WH-454 Room 801 East Tower,  401 M  Street,  Washington, DC  20460




(202)755-6023.




       Certification for air pollution control  loans and  other compliance




loans is not specified by the regulation.   In practice,however,  SBA does




require certification  from the appropriate  regulatory  agency for these loans




as will be discussed in the general  certification chapter.




       SBA can also require that another regulatory agency  certify or comment




on the control system contemplated under the loan.   Consider, for example,




a significant change in process to control  pollution,  such  as an electric




induction furnace replacing a cupola.  SBA  can  ask that OSHA (Department




of Labor) comment upon the worker safety of the contemplated compliance




program.




       SBA can also take measures to determine  if the  applicant  is in com-




pliance with all regulations whether or not they are related to  the process




subject to the application.  SBA does this  to anticipate  additional expen-




diture needs of the company in assessing risk.




       Most states, or EPA, will only provide certification if the company
                                 11-37

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is conforming to agency procedural  requirements  concerning permits  to




construct or operate.   Several states,  regardless  of financing,  require




a company to obtain a permit to construct a pollution control  device be-




fore it can be bought and installed.   The state  agency may therefore not




issue certification until the company also files the necessary papers for




a permit to construct.









       Other Documents.  A company must show substantial  injury  to  SBA




by demonstrating that commercial financing is not  available.   The typical




demonstration is a letter from the company's bank  refusing the applicant's




loan request.  In more densely populated cities  and regions,  the applicant




may have to furnish two such turndown letters.   If SBA suspects  that an




applicant xvith a turndown letter has  a good credit position,  then SBA can




go to another bank in the applicant's area and determine  if they will lend




money to the applicant.




       The SBA loan application (Appendix D) can be quite involved for




some companies to complete.  It asks  for the following, where appropriate:









       •   collateral offered as loan security




       •   additional guarantees of guarantors




       •   statements of personal history




       •   pro-forma financial statements




       •   financial statements for past 3 years




       •   description and history of business  debt schedules




       •   plans, specifications and costs of pollution control  equipment.
                                  11-38

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       Procedures.  As indicated earlier the bank's  turndown of a pollution




control loan request is the first step in obtaining  an SBA loan.   It is




then suggested that the company establishes contact  with an SBA officer




to discuss intent for a loan.   (Addresses of branch  and district  offices




can be found in Appendix C).   The loan officer should then determine whether




or not the potential applicant is definitely a small business and




explain the SBA appliction.  The loan officer can also inform an  applicant




as to which SBA pollution control financing program  is better for the ap-




plicant, i.e., the direct compliance loan or the lease guarantee(to be dis-




cussed in the next section).




       Upon a positive determination of small business eligibility,the




applicant should obtain the necessary certification  letters from  the ap-




propriate regulatory agency(ies).  While waiting for certification, the




company should complete the application.   When certification is obtained,




the SBA application can be submitted.




       Loans greater than $500,000 must be approved  by SBA Washington




headquarters.  This requirement adds time to the overall approval process.




       Certification from EPA, or states, for water  pollution loans is




required within 45 days of application.   It can be expected that  air pol-




lution certification can occur within the same time  period.  SBA processing




takes one to two months generally, but could take longer,  depending upon




the complexity of the loan and the completeness of the application.  Ap-




proved loans that cannot be funded immediately because of budget  limita-




tions are carried into the next quarter when SBA funds are replenished.
                                 11-39

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       Costs.   No SBA fee structure exists for direct loans and no  cer-




tification costs are assessed by the regulatory agencies.   Out-of-pocket




costs are incurred by the applicant to fulfill such requirements as an




assessment for collateral evaluation.   Some companies may also need the




services of their accountant to complete the application.




       One characteristics that adds considerably to loan processing time




by SBA is additional requests by them for information or insufficient




application information submitted by the company.   Since SBA is very thorough,




an applicant should discuss at the first meeting exactly what SBA wants




in the application.  Such a step reduces lost time and therefore costs




for the potential borrower.








       8.  Other - Multiple Loans








       Applications for loans covering more than one pollution control




requirement can be made as one package.  The applicant must have  certi-




fication for each requirement.  SBA's loan processing time for a multiple




loan does not increase significantly.








       9.  Legislative Reference








       All legal matters pertaining to SBA compliance loans are found in




Sections 7(a) (5) and 7(g) of the Small Business Act.
                                  11-40

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                               Section D







               Small Business Administration Lease Guarantees









       In June, 1976 Congress provided the Small Business Administration




 (SBA) with a significantly different mechanism than just described for




assisting small business in controlling pollution.  While the former pro-




gram covers loans, this new mechanism covers leases under qualified con-




tracts.  The area of pollution control financing in which leases occur




most is in Industrial Development Bonds (IDBs).  Therefore, this program




is expected to take the form of SBA guarantees of small business payments




to municipalities that issue IDBs for industrial pollution control projects.




       The likelihood is that each IDB issued will cover the expenditures




of several small businesses.  As has been shown in section B, IDBs must




be of such a magnitude that the interest savings to the company exceeds




the administrative, sales and legal expenses of obtaining IDBs.  This level




is generally $500,000 - $1,000,000.  It may take several small businesses'




pollution control expenditures to reach those levels.   Even if small busi-




nesses singularly have expenditures that exceed the minimum level, they




can still benefit from this program.  Their savings of interest over IDB




costs will be greater if they can join a group in the financing.  Secondly,




if the company's name and credit reputation is not widely known they would




not be able to issue an IDB unless a guarantor of'sufficient credit reputa-




tion and name was also obligated in the issue.




       The purpose of this legislation was to provide small businesses




with access to such capital markets on equal footing with large businesses




which frequently finance their pollution control facilities through tax-free




IDBs.  However, all small businesses will not be able to use this lease
                                 11-41

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guarantee program.  SBA expects that companies with financial  needs greater




than $250,000 could use the lease guarantee program while companies with




lesser needs would use the SBA compliance loan program.




       It is not necessary that a small business  be involved in an IDE for




SBA's guarantee to be utilized.  The enabling legislation for  the lease




guarantee program specifies qualified contracts for the  lease  as  "a lease,




sublease, loan agreement,  installment sales contract or  similar instrument




entered into between a small business concern and any person,"




       SBA is in the process of developing specific regulations for the




lease guarantee program,  as well as  conducting a pilot program in California.




The most controversial regulation is the fee that SBA will charge the com-




pany for the lease guarantee.  The law permits up to 3%  % per  annum of




the minimum annual guaranteed payments.  SBA has  indicated they will probably




set the fee at 3%%.  Others argue that much of the benefit of  this program,




and therefore, the equal  footing with large businesses,  will be lost at that




high a rate.




       Other details of the program include a 25 year limit on guarantees




and a 100 percent guarantee (as opposed to regular SBA guarantee programs




which are 90%).  In addition, applicants must have been  in business five




years and have a history of profitable operations on average over the last




three fiscal years.  These last two conditions are different from the com-




pliance loan program.




       The budget for this lease guarantee program is $15 million.  The




budget is not an amount to which SBA has access.   It is  a contingency amount




for uncovered expenses and losses.  SBA is designing the program to be self-




sustaining and is therefore not expecting to use the budget.  The budget




figure does not mean any limitation on the number or amount of leases that




can be guaranteed.
                                  11-42

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       1.  Benefits of the Program



       Precise benefits cannot yet be determined for the small businesses

that utilize this lease program.  It is only after the program begins market

operation that interest rates will become known.  Estimates by bond analysts

place the rate as equivalent to AM municipal bond rates.

       Regardless of the inability to as yet determine the precise benefits

of this program, it can be said that a small business will gain significant

benefits over conventional financing.  The reader can refer to Section B.I

and C.I  (IDBs and SBA loans) to gain an idea of the range  of benefits that

the lease guarantee program may provide.



       2.  Eligible Program Users



       The number of eligible small businesses for the lease guarantee pro-

gram will be different from the number eligible for the compliance loan

program for two reasons.   The lease guarantee program has  two definitions

of size, either of which can be used at SBA's discretion.   One definition

is the same as that for compliance loans which is based upon maximum number

of employees per SIC.   The second definition involves dollar limitations

and potentially expands the number of small businesses that could be elig-

ible for the lease guarantee program.  It states that a company is eligible if it
        together with its affiliates,  is  independently owned and
       operated, is not dominant in its field  of operation,  does
       not have assets exceeding $9 million, does not  have net
       worth in excess of $4 million,  and does not have an aver-
       age net income, after Federal income  taxes, for the pre-
       ceding 2 years in excess  of $400,000  (average net income
       to be computed without benefit  of  any carryover loss).
                                 11-43

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       On the other hand,  SBA has imposed eligibility criteria on this




program which are intended for the more credit-worthy companies in the ex-




panded coverage.   Those criteria are that a company has to have been in




business five years and must have had profitable operations on average




over the last three fiscal years.








       3.  Eligible Pollution Control Programs








       Eligible programs are the same as for SBA compliance loans.








       4.  Eligible Pollution Control Expenditures








       Although this is an SBA program, the IDE criteria apply for deter-




mining eligible pollution control expenditures.  These criteria are more




restrictive than SBA's.  The reader should refer to Section B.4 for the




specific criteria.  Should a significant portion of expected expenditures




be ruled ineligible under IDE criteria, the application could be withdrawn




from the lease guarantee program and placed with the direct compliance




loan program.








       5.  Availability of Funds








       SBA has a separate budget for the lease guarantee program.  In theory,




therefore, the funding of this program is not affected by the compliance  loan




programs.  The fund is a revolving fund and therefore not subject to fiscal




year limitations.  The amount of the fund is $15,000,000 and covers losses




or other expenses not recoverable in normal operations of the program.
                                  11-44

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       6.   Duration of Program









       The enabling legislation does not contain an expiration date for




the program.  Its actual duration depends on the rate at which the $15,000,000




is consumed, and on the inclinations of Congress to increase the fund.









       7.   Utilizing the SBA Lease Guarantee









       SBA has not yet promulgated regulations for the conduct of the lease




guarantee program.  SBA has, however, issued guidelines for the operation




of the pilot lease guarantee program being conducted in California.  The




guidelines contain many procedures smiilar to those for direct compliance




loans.  The guidelines are reproduced as Appendix E.









      Certification.  The procedures applicable to direct compliance loans




are also applicable to lease guarantees (see C.7.a).









       Other Documents. The most significant difference in procedures be-




tween the two SBA pollution control financing programs is in the requirement




for a bank to sponsor a company.  Sponsorhip by a bank does not impose an




obligation upon the bank for the company.  Sponsorship is a statement of




opinion from a bank that the company is creditworthy.  The financial anal-




ysis of the bank must include, among other things, the composition and




adequacy of the small business!s fixed debt requirements, past and projected




earnings,  debt to worth ratio, working capital sufficiency, etc.









       Procedures.  A company should discuss its situation with a branch or




district SBA office (addresses in Appendix C).  Presuming the company has
                                   11-45

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been denied financing at reasonable terms,  it should then apply to EPA for

certification and should concurrently obtain bank sponsorship and complete

the SBA lease application.   SBA can process the lease guarantee after it

receives EPA's certification and bank sponsorship.

       The amount of processing time for obtaining a lease guarantee is not

yet documented.   The time should be longer than that of a direct compliance

loan since bank sponsorship is an added step and since many of the IDB

steps, such as,  bond resolutions and bond council rulings may be involved.



       Fees.    An applicant for this program pays two fees that are not in-

curred under the direct compliance loan program.  The first fee is a guar-

antee  fee which can be a maximum 3% percent of the minimum annual guaran-

teed payments.  SBA has also set a processing fee to cover administrative

expenses.   The fee schedule is as follows:
       Amount of Contract          Base Fee
       Payments Guaranteed


       Up to $500,000              $1,000

       $500, 000 to $1,000,000       1,000

       $1,000,000 to $2,500,000     2,000

       Over $2,500,000              4,250
       Additional Fee
+   .002 of above $500,000

+   .0015 of above $1,000,000

+   .001 of above $2,500,000
       Each application submitted to SBA must be accompanied by $500 of the

above fee, which is not refundable.   The remainder of the fee is payable

upon request for the issuance of the guarantee.
                                  11-46

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       8.   Legislative Reference








       Section 404 of the Small Business Investment Act contains the basic




enabling legislation for this program.
                                  11-47

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                               Section E






        Economic Development Administration  Financial  Programs








       The Economic Development Administration  (EDA) under the Federal




Department of Commerce provides financial  assistance to  industry primarily




to create and secondarily to preserve jobs.   This  program was  created




in 1965 under the Public Works and Economic  Development  Act.   Financial




assistance under various EDA programs can  consist  of loans,  guarantees




or grants.  EDA does not have special authorities or budgets  to make pol-




lution control financial assistance;  however, pollution  control is  occasional-




ly included in some of the financial  assistance programs of EDA.




       There are two programs of EDA  that could  benefit industrial pollution




control expenditures.   The first program is  under  Title  II of  EDA legis-




lation and provides direct loans or loan guarantees to industry to  create




jobs.   If a company is threatened with closure  due to  pollution control,




EDA can make loans or loan guarantees to preserve  jobs.   The other  EDA




program whereby industries pollution  control expenditures could benefit




is under Title IX.  Under that program,  grants  are the vehicle instead




of loans or guarantees, and such grants are  made to communities for com-




munity-owned property.  This community-owned property  can consist of waste-




water treatment and collection facilities  which industry uses.




       EDA does not aggressively seek companies for pollution  control




loans under Title II.   EDA does,however, monitor the Environmental  Pro-




tection Agency's Early Warning System that lists companies where plant




closure is threatened.  Under Title II when  it  is  imminent that a company




will close due to pollution control,  EDA will contact  the company for pos-




sible assistance.  Under Title IX, EDA has a more  explicit authority to seek
                                11-49

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to place environmental grants for pollution control,  though  the main  objec-




tive under this program is to grant monies for municipal  wastewater treatment




expenditures.




       The number of pollution control  loans made  to  industry under the




Title II program has only been 2 or 3 over the past six years.  EDA loans




are typically large and may cover companies of 200 employees or greater.




The Title II program of EDA is essentially for large  businesses and is  to




them what SBA loans are to small businesses.  Loan amounts are geared to




the number of jobs.  Loan amount formulas are typically between $5,000




to $10,000 per job created or preserved.   Therefore, loans are typically




$1,000,000 or greater (based upon 200 employees at $5,000 per job).




       The actual EDA Title II program can consist of both loans  and




guarantees.  Direct loans can be made for fixed assets or for working




capital.  Such loans cannot by law be greater than 65% of project  cost.




Typically the percentages are lower than that specified in the law due




to funding limitations.  Guarantees can be extended by EDA for loans  or




for leases.  Guaranteed amounts can not exceed 90% of the amount  of the




project.




       Under Title IX  there are no such formulas  specified by the legis-




lation for EDA grants.  Grant amounts are established on  a case-by-case




basis.




       The current fiscal budget for Title II loans is $40,000,000.  The




current fiscal budget for Title IX grants is $68,000,000.




       EDA has regional offices; the Philadelphia  Office  covers  the Middle




Atlantic and New England states.  Each state has an EDA representative




who often activates projects or can answer questions  for possible loan
                                   11-50

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or grant candidates.




       Each element below will describe the characteristics for both Title




II and Title IX programs.









       1.  Benefits of the Program









       The major benefit of EDA programs is that an ailing company may




have access to a source of funds.   EDA will only make direct loans or




guarantees to industry or grants to communities  if they have no other funds




commercially or otherwise available.




       Under Title II, loans are made at a specified treasury rate.   The




loans usually have long repayment  terms, and in  the case of fixed assets




would not likely exceed the useful life of the fixed asset.  Rates on loan




guarantees are subject to negotiation between the lender and the company.




The numerical benefit of EDA  loans is the same  as the benefit of Small




Business Administration direct compliance loans.




       Under Title IX the benefit  of the program is that no repayment




is required.  However, the full cost  of a program such as pollution control




may not be awarded under the grant.   The amount  of the grant will depend




on a case-by case evaluation of the amount of expenditures involved and




the need of the community/industry.




       An industry does not have to repay any part of the grant.
       2.   Eligible Program Users
       Under Title II and Title IX,  programs,  all  large companies are
                                 11-51

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eligible for EDA programs.   The definition of large  begins  where  the




definition of small leaves  off under SBA programs.









       3.   Eligible Pollution Control Programs









       Under Title II,  any  pollution control or regulatory  program which




threatens the closure of a  plant would qualify for financial  assistance.




Under Title IX^a somewhat more restrictive eligibility exists due to the




nature of pollution control programs funded.  Grants only go to those




programs where community-owned property is involved.  An example  is a




wastewater treatment or collection facility which is owned  by the munici-




pality.  A way of utilizing this program for air or water pollution control




at the plant level is when  the municipality takes title to  property used




by an industry under an industrial development bond program.









       4.  Eligible Pollution Control Expenditures









       All process change and end-df-line expenditures are  eligible under




EDA Title II or Title IX programs.









       5.  Availability of Funds









       The availability of EDA funds for Titles II and IX are relatively




restricted and are not sufficient to satisfy demand for all projects re-




gardless of pollution control.  The budget  for Title II programs for fiscal




year  1977 was $40,000,000.   The budget for  fiscal year 1977 for Title IX




programs was $68,000,000.  A greater amount of funds under Title IX is
                                 11-52

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likely to go to pollution control  than  is  likely  under  Title  II.   As  indicated




earlier, there have been 2 or 3 pollution  control loans under Title II.




There are no figures available to  indicate what the  demand for EDA loans




could be with unlimited funding.   For example, EDA does not publicize or




promote Title II programs in an active  way.   Under the  Early  Warning  System




monitoring that EDA performs, a company is only contacted if  imminent closure




is threatened.








       6.  Duration of Program








       The duration of Title II and Title  IX programs is dependent on




annual funding by Congress.  The EDA is not a permanent agency under  the




Department of Commerce; therefore  appropriations  for their budget have to




be made yearly.  It is anticipated by EDA  that Title II and Title IX




programs will continue.








       7.  Utilizing EDA Assistance








       The loan application process for EDA loans under Titles II and IX




is quite involved and time consuming.   It  is time consuming for the appli-




cant to complete the entire application package including necessary docu-




mentation.  It is also time consuming for  EDA to  process the  loan application




because it often performs its own  feasibility study  of  the project.  There




are many parties involved in the loan or grant package  under  EDA programs.




These parties will be enumerated below. There are no longer  any fees charged




for Title II or Title IX applications.
                                 11-53

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         Certification.  Whenever pollution control  is involved under




Title II loan or guarantee programs  or Title IX grants,the applicant




must submit the notice from the appropriate agency that the agency intends




to shut down the facility if compliance is not achieved by a certain date.




Certification is also required from the pollution control  agency for the




actual equipment which will be installed to control  pollution.   For any




new project involving greater than 1 million dollars,  a feasibility study




prepared by an independent consultant must also be submitted with the ap-




plication.  For projects of less than 1 million dollars the company itself




may submit a feasibility study package.  Specific details  of the pollution




control compliance certification as well as feasibility studies are not




specified in the EDA regulations.








       Other Documents.      The applicant must submit evidence from banks




or other commercial lending institutions that the company  is not able to




obtain financing.  The application for Titles II and IX are contained here-




in as appendix F.   There is considerable information required  on this ap-




plication pertaining to employees, collateral for loans,  the cost of the pro-




ject, the financing sources for the project including the  participation by




the company, EDA, banks, and any government agency.








       Procedures.  Applications for Title II and Title IX programs are




available from the appropriate regional EDA office.   The Philadelphia




EDA office is located at 6th and Arch Streets, Philadelphia, PA  19107,




(215)597-7889.  It is advised that a potential applicant spend  some time




with an  EDA loan officer to review the application and information that
                                  11-54

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is required.  It is then necessary to complete the application package along




with all of the other documentation required, such as certification, feasi-




bility studies, collateral appraisals and evidence of the unavailability




of financing.  This entire process will be time consuming and involve




considerable cost to the applicant, i.e.  administrative costs.  The ap-




plication is then submitted to EDA.  EDA can perform its own feasibility




on the project if it so desires.   It will also do considerable investiga-




tion into the project.









       Costs.  There are no fees  for submitting applications for Title




II or Title IX financial assistance programs.   Under the Title II guar-




antee program,a fee existed until January 1, 1977.  EDA does have the




right, when they require additional studies or appraisals, to assess the




company for the conduct of those  efforts when they are performed by per-




sonnel outside of EDA.









       8.  Legislative References









       Authorities for these programs may be found in the Public Works and




Economic Development Act of 1965, as amended:   42 U.S. Code 3121 et seq.




The rules and regulations issued  pursuant thereto are contained in Title




XIII, Chapter 3, Code of Federal  Regulations.
                                11-55

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                              Section F




           Financial Assistance to Farmers and Rural Industry from the




          Fanners Home Administration and Small Business Administration









       Any farmer facing pollution control expenditure requirements and




who is unable to obtain financing, or obtain it at reasonable rates, is




eligible for additional federal financial assistance.  The same assistance




for pollution control is also available to rural businesses that cannot




obtain financing.  The assistance is primarily available from the Farmers




Home Administration of the U. S. Department of Agriculture and secondarily




from the Small Business Administration.  Rural businesses and farmers are




also able to use the other federal programs previously described.  However,




the financially weak rural business and farmers are the primary benefici-




aries of the programs to be described in this section.




       The pollution control requirements need not be federally imposed to




qualify for FmHA assistance.  For example, if a farmer is complying with




local nuisance complaints, he can receive assistance from FmHA or SBA to




control the nuisance.




       Other pollutant control needs include, for example, non-point source




water pollution control, fugitive dust control, erosion and sedimentation




control and feedlot discharge controls.




       The type of financial assistance available to farmers is largely




direct loans at low interest rates and moderate to long term repayment per-




iods.   Guaranteed loans are provided in these programs, but direct loans




(referred to as insured loans by FmHA) are more widely used for farmers.




For its rural business and industrial loan program,  FmHA uses guaranteed




loans  almost exclusively.
                                 11-57

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       FmHA has five different financial  assistance programs  that can cover

pollution control expenditures of profit  oriented farmers  and/or rural busi-

nesses:  Soil and Water Loans , Operating Loans,  Farm Ownership Loans, Busi-

ness and Industrial Loans,  and Water and  Wastewater Loans  and Grants.^ '

All of these loan programs  can fulfill non-pollution control  needs as well;

therefore,  the budget figures need to be  kept in  this perspective.  SBA

has one program that covers farmers when  the size of funds required cannot

be completely loaned by FmHA and when SBA can cover the size  required.  All

of these programs have different characteristics.  The description of all

these programs will depart  from the format of the other programs.  Each

program will still be described individually but  not in such  a formated

structure.   Emphasis will be placed on the characteristics that differenti-

ate the FmHA programs from  each other. A section will then describe

the commonalities of the various programs.  A concluding section then de-

scribes the SBA loan program and how the  FmHA and SBA programs are integ-

rated.



       1.  Soil and Water Loans



       Assistance provided  under this program is  for improving and con-

serving water supplies, and for preventing contamination of ground water or

streams.  The assistance was provided at  first for 17 western states under
   FmHA also has a loan program for farmers converting or acquiring land
   for recreation purposes.  This program is not covered herein since it
   is unrelated to mandatory environmental requirements.   FmHA can also
   make loans to associations of farmers for purposes of pollution control,
   where the association cannot obtain credit elsewhere.  This program
   only has a $4,000,000 budget (considered small, relative to other FmHA
   programs) and is not given separate treatment here.
                                11-58

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the Water Facilities Act of 1937.   In 1954 the Act was changed to include
all states.
       Soil and Water Loan assistance typically consists of insured loans,
although guaranteed loans can be made.   Insured loans are made at a 5 percent
rate of interest as prescribed by Federal statute.  Guaranteed loans cover
90 percent of the expenditure and also have a 5  percent interest rate stat-
utory limit for the borrower.  FmHA provides a subsidy to the lender, cur-
rently 3 percent, for guaranteed loans in order to make up the difference
in what are going lending rates.
       The maximum Soil and Water Loan principal may not exceed $100,000
and the combination of all debts against the property may not exceed
$225,000 or the market value, whichever is less.  Loan repayment periods
under this program can be as long as 40 years but no longer than the useful
life of the project involved.  Loan needs greater than the above limitations
may be satisfied by SBA.
       This particular FmHA program has been in existence for many years.
However, beginning in fiscal year 1976, the funding for this program was
raised considerably.   Funding levels prior to fiscal year 1976 were on the
order of 3 million dollars per year.  Budgets for fiscal years 1976 and 1977
were increased by Congress to approximately 53 million dollars.   This in-
creased funding was due to expected pollution control needs and has helped
FmHA erase some of the widespread shortages of funds that exist in other
FinHA programs that have overlapping lending authority,  such as farm owner-
ship.   Even with this funding boost, however, the first quarter 1977 budget
for Soil and Water Loans was depleted 3 weeks before the quarter ended.
       Soil and Water Loans are the only FmHA  farm loan program herein
described for which nonfamily farming entities are eligible for financial
                                 11-59

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assistance.  In most other FmHA farm loan programs,  only the family farmer




is eligible.  The term'fcorporate farming entity"includes partnerships and




proprietorships as well as private corporations engaged primarily in farming.




The definition of family farm is included in the next loan category.




       The typical use for Soil and Water Loans is for irrigation.   However,




erosion control measures such as grassways,  land leveling, ditching, con-




touring, lagoons, etc. are eligible under this program.  These latter types




of erosion control measures can also fall under the FmHA Farm Ownership Loan




program which is described as the third program in this section.




       The low rate of interest and long repayment terms on these loans makes




their benefit one of the highest when compared to programs previously men-




tioned outside FmHA programs.  Funding for the program is provided on a




yearly basis by Congress.  Procedures for obtaining the loans are presented




in a later section.









       2.  Operating Loans









       Under this financial assistance program, loans can be made for pollu-




tion control expenditures that are relatively short lived.  The program,




however, covers all short-term farm operating requirements.  This program




grew out of an emergency farm production loan program enacted in 1949 and




expanded in 1961 to include operating loans.  Short-lived expenditures might




include small equipment, such as a tractor to move manure from drainage




areas or a device for cleaning barns of potential pollutants.  The majority




of loans under this program are insured loans.  The maximum repayment period




is 7 years.  Although loans have a maturity of 7 years there is a provision
                                11-60

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for a 5 year renewal.  The interest rates for these loans are determined by




a formula; in 1977, the rate was 8 percent.  The fiscal budget 1977 for this




program was 625 million dollars of which 10 million is expected to be for




guaranteed loans.  Funding is provided annually by Congress.




       Operating loans are only for family farmers, which is defined as a




family which provides the management and major portion of the labor for the




farm.




       At no time may a borrower's total principal indebtedness for FmHA Farm




Operating Loans exceed $50,000.  Loan requirements greater than $50,000




should be handled through the Soil and Water Loan program (up to $100,000)




and the SBA farm loan program (beyond $100,000).




       One of the benefits of this program is that it provides a source of




funds that may not otherwise be available.   The interest rates are lower




than those most operators in financial difficulty can obtain.  However, the




interest rates are not as low as other FmHA programs and other Federal fin-




ancing programs.  Loan application procedures are discussed in a later sec-




tion.








       3.  Farm Ownership Loans








       These loans cover real estate ownership for a family farm and include




land purchase,  farm enlargement, land and building development, and refin-




ancing.   The program was created by Congress in 1932.  The definition of




family farm is the same as the definition for family farm under Operating




Loans.   The loans can be made up to a period of 40 years, and the Federal




statutory interest rate is limited to 5 percent.
                                11-61

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       The overall budget for this program was 450 million dollars in




fiscal year 1977.  That it is not adequate to meet present demand is evi-




denced by the fact that the first quarter budget for 1977 was already com-




mitted early in the quarter.   The budget is not apportioned between pollu-




tion control and nonpollution control farm expenditures.




       The majority of this budget is used to make insured loans.  The




maximum Farm Ownership Loan principal may not exceed $100,000 and the com-




bination of all debts against the property may not exceed $225,000.  As was




the case for previously described FmHA programs, farmers  with needs greater




than those limitations should apply to SBA.




       Some pollution control measures allow an applicant to qualify for




Farm Ownership Loans or Soil and Water Loans.  In such instances FmHA will




(assuming funds are available) fulfill the loan under the program that is




best for the applicant.




       This program ranks, along with FmHA Soil and Water loans, as one of




the best Federal assistance programs because of low-interest rate and,long




repayment term.









       4.  Business and Industrial Loans









       This FmHA program may provide financial assistance to improve, among




other things, the economic and environmental climate in rural communities,




including pollution abatement and control.  A rural area is defined as any




area outside the boundary of a city of 50,000 or more and its immediately




adjacent urbanized areas with population density of more than 100 persons




per square mile.  Priorities for loans are given to applicants for projects




located in open country or rural communities and towns of 25,000 and smaller.
                                11-62

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The main thrust of the program is to create and maintain jobs in rural




areas.




       Loans under this program are in the form of a loan guarantee, whereby




FmHA, upon loan default, reimburses a lender for a maximum of principal ad-




vanced plus accrued interest.  Borrowers of less than $500,000 are encour-




aged by FmHA to apply for assistance through the Small Business Administra-




tion.  There arc no dollar limitations on the size of a Business and Indus-




trial loan.  The fiscal year 1977 budget for this program was 350 million




dollars.  Interest rates are negotiated between the lender and the applicant.




       Loan repayment period cannot exceed 30 years for land, buildings,




and permanent fixtures; 15 years for machinery and equipment; or 7 years for




working capital.  Ordinarily a minimum of 10 percent equity at loan closing




is required of the applicant.




       Demands for funding under this program greatly exceed the available




funds at present.   The financing of pollution control expenditures is only




part of the loan purpose for the program.









       5.   Water and Wastewater Loans and Grants









       The Farmers Home Administration (FmHA) is authorized to make loans




and grants to develop water and wastewater facilities for public use in




rural areas and in towns of up to 10,000 people.  This assistance is a




supplement to Federal Water Pollution Control Act wastewater treatment




construction grants.




       Authority to finance water facilities was first received in 1937




with the enactment of the Water Facilities Act.   The authority was expanded




in 1965 to include the financing of wastewater facilities.   The program is




currently authorized by Section 306(a) of the Consolidated Farm and Rural
                                 11-63

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Development Act of 1972.




       The maximum term on all loans is 40 years.   However, no repayment




period can exceed any statutory limitation on the organizations' borrowing




authority  or the useful life of the improvement or facility to be financed.




The interest rate currently is 5 percent of the unpaid principal.




       Facilities financed by FinHA must primarily serve rural residents;




however, other users in the service area may be included in the facility




design.  Industries which may be served by such a facility are expected to




pay their share of the wastewater treatment costs.  The formula for indus-




trial repayment is not the same formula that EPA uses for its municipal




wastewater construction grant program.  The industrial repayment for these




FmHA loans are either determined by the Public Utility Commission having




responsibility for that location or the design engineering firm for the




wastewater treatment plant.  As part of the loan repayment formula, in-




dustries with large wastewater flows are given bulk discount rates.  (Such




discounts are not available to industries under the EPA construction grant




cost recovery systems.)  For fiscal year 1977, $600 million in loan funds




and about $265 million in grant funds were available.








       Common Elements in FmHA Assistance Programs








       All of the above FmHA programs have certain commonalities, especially




involving procedures for obtaining the financing.  All applicants must be




able to demonstrate that financing is unavailable or only available at terms




which they cannot afford.  Evidence that other credit is not available need




not be obtained in writing, but should be referable.  All applicants must



first contact the local FmHA county office, of which there are approximately
                                  11-64

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1750 throughout the country.  The local county office can handle the major-




ity of all loan applications and has independent decision-making authority.




The local county supervisor will determine the best loan program for cover-




ing pollution control or any other expenditures for which a loan is being




requested.  FmHA charges no fees for the loan or guai^antee programs it




provides.  Occasionally certain application and loan closing costs must be




paid by the loan applicant.  Such costs may include credit report fees,




title searches, and title insurance.  Collateral appraisals are performed




by FmHA personnel in most cases.  Funding for all of these programs is pro-




vided by Congressional appropriations on a year-to-year basis.  An applica-




tion package for all FmHA programs is included as Appendix G.









       Small Business Administration Loans to Farmers









       Public Law 94-305, approved June 4, 1976, now permits all small




agricultural enterprises to be eligible for financial assistance from SBA.




The passage of that law gave SBA and FmHA overlapping loan authorities for




such enterprises as small business concerns engaged in the production of




food and fiber, ranching, and raising of livestock, and all other farming




and agricultural related industries.  SBA's authority includes the types of




farming activities described in the five FmHA programs.




       The passage of this law was partially motivated by the lack of funds




in FmHA programs.   In addition, FmHA has received the extra Soil and Water




I-oan funds already discussed, which have helped some of the funds deficit.




However,  some FmHA loan programs such as Farm Ownership still have greater




demand for funds than the supply.




       To resolve the question of how to handle the overlap in loan
                                 11-65

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authorities, FraHA and SBA,  in September 1976,  established a memorandum of




understanding (Appendix H); staff in either office should be expected to give




an applicant a determination of which agency has the authority in a given




situation.  In essence, the guidelines specify that FmHA is to handle loan




requests when applicants qualify for both programs.  One exception is when




FmllA's lending limits in a particular program are less than the applicant's




request and when  SBA's limit are not exceeded by the request.  In order to




avoid two partial loans in that case, the application should be made through




SBA.  Another exception is when the project is an FmHA Business and Indus-




trial Loan type but is for an amount less than $500,000.  Again, SBA is the




appropriate source.




       Applicants, who were initially directed to an FmHA program but who




are denied FmHA assistance for any reason, including lack of available funds




in the program or an inadequate company credit for an FmHA program, may then




contact SBA.




       The reader should refer to Sections C and D of this report for a




complete description of the SBA financial assistance programs for pollution




control.




       The flow diagram which follows is a useful summary to indicate which




direction a farmer or rural business should go (or would be directed) for




assistance based on specific conditions.  Such a flow diagram is necessary




because of the overlap in lending authorities between FmHA and SBA, and




among FmHA programs.




       The diagram first asks whether the potential applicant is a farmer




or rural business.  If a rural business, the applicant is directed to FmHA's




business and industrial loan guarantee if the amount of funds required is




greater than $500,000 or to SBA for lesser amounts.
                                 11-66

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                                             SBA and FmHA Assistance for Farmers
                                             and Rural Businesses
  Rural'
Business
$500K
Needed
                                                 Real
                                                  or  _\  Personal
                                               personal \
                                               property  ~
                                                                                    FmHA
                                                                                  3perating
                                                                                    Loan
                             >$100K
                              Needed
  FmHA
 Soil
  Water
  Loans
                                                 Funds
                                                in  FmHA
                                               vmership
                                                 loan
                                                 und
                               FmHA
                             Soil   S,
                               Water
                               Loans
                              Cost
                      NO   /   of
                           Qwnership
                              Fund
                              stte
                               i
                                                             FmHA
                                                            Soil
                                                             Water
                                                             Loans
 Companies  must meet SBA small  business  criteria
\See definition in text
                                     11-67

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       Farmers are then divided into two categories: family and non-family.




Corporations, partnerships and the like can only receive loans from the




Soil and Water Loan fund, and then, only if their need is less than $100,000.




Otherwise the non-family farmer must apply to SBA.




       The pollution control needs of family farmers must then be divided




into personal versus real property.  Personal property pollution control




measures can be satisfied by FmHA's Operating Loan program if the needs are




less than $50,000; the Soil and Water Loan fund if needs are between $50,000




and $100,000; and SBA if the needs are greater than $100,000.




       Real property needs can be satisfied by either SBA (where needs are




greater than $100,000) or one of two of FmHA's programs, i.e., Farm Owner-




ship or Soil and Water.  The choice between the two FmHA programs is based




on funds availability and cost to the farmer.
                                 11-68

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                              Section G



                   INDUSTRIAL COST RECOVERY SYSTEMS



       Companies that generate wastewater sometimes have the option of

treating the wastewater themselves and directly discharging to a stream,

or indirectly discharging to a stream through a publicly owned treatment

works (POTW).   A company's choice of direct or indirect  wastewater dis-

charge depends upon many factors including the following:



       •    To discharge directly to the stream,  the company must consider

            its costs for treating all wastes to  conditions specified

            by discharge permit  and its costs to transport the waste-

            waters to stream

       •    To discharge through a POTW, the company must  consider the

            POTIV charges for treating"compatible" wastes;  the company

            costs to pre-treat "incompatible"  wastes; and company costs

            to transport wastewaters to the POTW.



       Section 204(b)(l)(B) of the Federal Water Pollution Control Act

requires that industrial users of publicly owned treatment works receiving

federal grants make payments for that portion of the cost  of construction

of such treatment works which is allocable to the treatment of such in-

dustrial wastes.  The resulting charges are called industrial cost recovery (ICR)

and are for the capital (construction) costs associated  with treating

a company's compatible wastes, or handling pre-treated wastes.
 "Incompatible wastes"refers  to  industrial pollutant  discharges  that  are
  not normally present  in the wastes  of  residences. "Compatible  wastes"of
  industry are present  in residential wastes  and primarily  include
  pended solids and biological oxygen demanding wastes.

                                  11-69

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     The capital costs,  without  interest,  are  repaid  over  the  useful  life




of the POTW or 30 years,  whichever  is  shorter.   Industrial  cost  recovery only




applies to the federal  grant  portion  (usually  75 percent)  of the POTW capital




costs.  POTWs may have  to charge interest  when recovering  capital costs




to repay the debt incurred in procuring construction  cost  money  for the




remaining 25 percent share,  although  interest  costs for  the local con-




struction cost share can be  reduced when the states provide grants for a




portion or all of the local  share.




     It may appear peculiar  to some companies  who  discharge to upgraded  POTWs




that this program could be categorized as  providing financial  assistance.




These are the companies who,  because  they  must now pay their  equitable




share of POTW capital and operating and maintenance costs,  must  pay con-




siderably more than charges  experienced in previous years  before the  FWPCA.




       There is one important reason  why POTW  equitable  cost recovery




systems are categorized as providing  financial assistance.  A  company




would, in most instances, experience   higher costs to meet effluent limita-




tions if they discharged directly to  a stream  than if they pretreated




if necessary and discharged to a POTW (discharged  "indirectly" to a stream).




Assuming equal stringency of direct or indirect treatment  of pollutants,




the direct discharger purchases capital equipment  and pays interest,  or




an opportunity cost; the indirect discharger  is also  assessed  capital costs,




but interest payments are not required. The exclusion of interest payments




on the company's portion of the POTW's capital costs  is considered a form
                                  11-70

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                        2
of financial assistance.

     The financial assistance of municipal treatment can be offset by

at least two factors.  First, POTWs are sometimes cost ineffective, which

could result in a higher capital cost to the company than what would be

incurred by the direct discharger.  Secondly, POTW costs for the flow

through of pre-treated wastewaters may be more than what the company would

have otherwise experienced if it discharged directly to a stream.

       A typical way in which industrial  cost recovery is calculated by

a municipality is to allocate the costs covered by the federal grant to

the various components of compatible industrial wastewater;  namely, waste-

water flow, suspended solids and biological oxygen demand.   The allocation

results in a cost per unit quantity of those three pollutants.  A company's

actual discharges are multiplied by the cost to obtain the  total capital

cost allocation.   The company is assessed the allocated  amount over thirty
                                                     3
years,  or less if the POTW has a shorter  useful life.

       An important  question about industrial cost recovery  is what happens

to the annual  payments if a company's  discharge subsequently is reduced

in volume or pollutant concentration.   The answer depends on the commitment

that the company initially made  with the  POTW.   The annual payments would

not be reduced upon  subsequent discharge  reductions if the  company had

reserved a specific  capacity of  the POTW.   The reservation  is the equivalent
2
  POTWs which receive federal  wastewater  construction  grants  must  also estab-
  lish a user charge system for the operation and  maintenance costs  of the
  plant.  The municipality must charge  industry  and  residences the full share
  of such costs and no benefit that could be  called  a  subsidy or cost  reduction
  technique is allowed.

  The above cost calculation procedure  appears straightforward.  However,
  there is considerable latitude in such  things  as the methods by  which the
  municipality allocates costs, the overall costs, and in  what constitutes
  normal and peak discharges.
                                  11-71

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of having purchased a treatment system of its own and being accountable




for the capital costs.   When no reserve capacity is involved,  the company's




annual payments would decrease upon subsequent discharge reductions.   Com-




panies that make no reservation commitment,  however,  run the risk of not




having access to POTW capacity if they expand in the  future.




     Other details of industrial cost recovery systems are important.  These




include the following:









     •  If an industrial user's maximum flow (hourly, daily, monthly, seasonally,




        etc.) contributes to the cost of construction of a treatment works,




        it should be the basis for that ICR payment.   No credit shall be




        given to the industrial user for the time period when the user is not




        operating and not discharging wastewater.  Credit may effectively




        result however when other users have peak needs during the time when




        that first industrial user is not discharging.




     •  Industrial users often discharge uncontaminated cooling waters




        into municipal treatment facilities.  Such cooling water is




        considered process waste and must be included in the ICR computation.




     •  Wastewater collection and treatment facilities are normally




        designed with unreserved excess capacity for expanded future




        use.  The cost of building such unreserved excess capacity




        into a facility is not to be recovered from existing users




        under the federal guidelines.
                                  11-72

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       •    Industrial users discharging pretreated process wastes into




            the municipal treatment facilities must pay industrial cost




            recovery based on the characteristics of the pretreated




            process wastes.









       1.   Benefits of the Program









       The following four scenarios demonstrate the extent of savings




which arise from the industrial cost recovery system of public treatment.




In each scenario, a NPV is computed for a $100,000 hypothetical cost of




water pollution control. The cost is assumed to be the same for the direct




and the indirect discharge.   An after-tax discount rate of 9% is used




in each scenario.









       Scenario 1 assumes a reasonable set of variables for completely




private financing, i.e., 10-year double-declining balance depreciation,




plus the 10 percent investment tax credit and a 10 percent, 10 year loan.




The NPV is $41,708.




       Scenario 2 assumes the same investment but with the lower interest




rate (6%) and longer payback period (20 years) characteristic of IDE




financing.   The NPV is $21,315.




       Scenario 3 introduces the interest free 75% federal subsidy for the




same plant tied into a municipal system,  but assumes that industry must




repay the entire cost (principal and 6% interest) to the municipality




for the 25% that it finances.  (This is a severe case, since often the




municipality does not include interest on its 25% in the industrial user




charge).   The repayment period is 30 years.   The NPV is $23,504.
                                 11-73

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     Scenario 4 presents the combination of the interest free 75%




federal subsidy and no repayment of principal  or interest on the 25%




municipal share.  Obviously, of course,  industry will be paying slightly




higher general municipal taxes in this case.   The NPV in this case is




$13,354.









     Scenario 1 can be compared to scenarios 3 and 4 for determining




the benefit of industrial cost recovery assuming none of the federal




pollution control financial assistance programs for direct discharge.




Otherwise, scenarios 3 and 4 needs to be compared to scenario 2, which




can be interpreted as saying that industry's benefit from industrial




cost recovery is the same or better than that which pollution control




IDBs provide.  Scenario 4 benefits are considerably better than those




of Scenario 2; however, Scenario 4 is not common, especially in EPA




Region III.









     2.  Eligible Program Users









     Industrial cost recovery applies to companies who discharge to




those POTWs which have received federal construction grants under the




Federal Water Pollution Control Act.









     3.  Eligible Pollution Control Programs









     This program is only applicable to water pollution.
                                11-74

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     4.  Eligible Pollution Control Expenditures









     This benefit is not available for POTW treatment costs which




 are  not  eligible for federal construction grants.  One example is costs




 unrelated to the requirements of the POTWs discharge permit.  In other




 words, if the  POTW treats a pollutant for a company but treatment of that




 pollutant is not required by the POTW's permit, then the POTW is unlikely to




 receive  federal construction grant money for the treatment of that pollu-




 tant.  Costs to connect the company to the municipal wastewater interceptor




 are  also not eligible for federal construction grant money.







       5.   Availability of Funds









       The vast majority of POTWs must  upgrade their treatment of waste-




waters to meet effluent limitations established under the FWPCA.   Congress




has intended that federal construction  grant money be available to POTWs




to perform the upgrading.   By the end of fiscal year 1977,  the $21 billion




provided by the 1972 FIVPCA amendments is almost entirely committed to




projects.  Additional funds are still required if the government  still




intends to assist in covering the upgrading costs.   Action on future




federal construction grant monies is  expected by Congress in the Fall of




1977.









       6.   Duration of Program









       Industrial  cost  recovery is  a  permanent part of the federal waste-




water construction  grant procedure.   The program will expand as long as




there is  federal  grant  money available.






                                11-75

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       7.   Utilizing Industrial Cost Recovery








       A POTW will automatically establish an industrial  cost  recovery




system if it receives federal grant money under the FWPCA.   Prior to




establishing the system the POTW will solicit information from companies




about future wastewater discharge plans.   It is important that companies




monitor and understand how the POTW is establishing the industrial cost




recovery system.  There are no hard-and-fast rules for allocating POTW




costs to industry, and the POTW has considerable discretion in such al-




locations.   Therefore, the companies involved have a stake in insuring




that the overall costs are reasonable and the allocations appropriate.




Discussions about costs should be held with POTW officials and the POTW's




engineering firm.




       There are no  certifications, other special documents,  or application




fees required by the POTW for industrial  cost recovery.  A significant




user of a POTW, i.e., greater than 10 percent of the POTW capacity, is




required to sign a letter of intent  concerning future usage plans.  The




letter of intent does not bind the company to future payments should it




decide to leave the POTW.








       8.   Legislative Reference








       Section 204(b)(l)(B) of the FWPCA requires industrial cost recovery




systems.  The provisions of such systems are contained in 40 CFR Part 35,




Subpart E.




       The Environmental Protection Agency has issued guidelines to




municipalities to help them establish industrial cost recovery and user
                                  11-76

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charge systems.   The title is:  Federal Guidelines - Cost Recovery Systems




Industrial Cost  Recovery Systems,  Municipal Waste-Water Treatment Works,




Construction Grants Program,  U.S.  Environmental Protection Agency MCD-45,




February 1976,  Revised August 1976.
                                  11-77

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Ill    CERTIFICATION FOR SMALL BUSINESS ADMINISTRATION
                POLLUTION CONTROL FINANCING


       To assure that the SBA loans and leases for pollution control
equipment are not used for improper purposes,  there is a requirement
that the equipment be certified by EPA as necessary and adequate for the
stated task.  SBA assistance cannot occur without such certification.
       Certification of necessity is not a new concept.   It means that
EPA certifies that the company is being required by, in this instance,
a pollution control agency to comply with a law.   Adequacy, on the other
hand, was first placed into use for SBA loans  in the 1972 amendments to
the Federal Water Pollution Control Act.  It means that the regulating agency
must also say that the equipment under consideration will do the job of
complying with the regulation.  Because such certification helps dis-
tribute the task of insuring proper usage of the SBA loan program,  SBA
now makes both adequacy and necessity a certification requirement for all
compliance loans.
       SBA has even taken certification a step further by requiring that
the certifying agency specify what equipment is extraneous to pollution
control.  This step makes certification more time consuming and difficult
for the certifying agency.  In practice, a reasonable doubt exists  as to
the thoroughness with which certifying agencies perform this step.
       This section of the manual will describe certification activity
and procedures within the states of EPA Region III.   The parties involved
in these descriptions are SBA, EPA, state pollution control agencies and
potential loan applicants.
       A significant aspect of SBA financial assistance  for pollution
                                III-l

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control loans is the infrequency of loan  applications.  By mid-1976,  there




had been only 20 applications  for certification made  to all  environmental




agencies within EPA Region III.   Of these,  16  certifications were  issued,




1 was pending, and 3 were presumed to have  been dropped by the  applicant.




Certifying authorities have advanced several reasons  for  the lack  of interest




among small businesses, including the lack  of  publicity by SBA.




       EPA has primary certifying authority for all compliance  loans.




Region III of EPA issues certifications for water pollution  control  equip-




ment in the region, except in  Maryland, which  requested and  received




certifying authority from EPA  for water pollution control projects.  None




of the other states in Region  III have requested water certification




authority; in fact they have refused to accept the authority despite their




seeming legislative mandate to do so. The  state agencies provide  certi-




fication for air projects essentially by  default, but in  virtue of the




fact that they designed the controlling State  Implementation Plans for




reducing air pollution.  SBA has been accepting state certifications in




most cases  so a viable procedure has evolved  in a manner unusually in-




formal for  government agencies.  However in one instance a  manufacturer




was required to obtain a certification letter  from EPA for  an  air  pollution




control project even though the state had supplied a  letter.  This was an




instance involving one of the  larger SBA  loans.  SBA  Region  III has informed




JACA that as long as they receive certification from  an  "authorized agency"




(underlined but not defined) they are satisfied; they do  not care  which




agency issues the certification.  The various  federal and state agencies




will be discussed below.
                                III-2

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            U.S.  Environmental  Protection Agency Region III









       EPA processes all certification for water pollution control pro-




jects within Region III, with the exception of Maryland.   EPA has issued




no air certifications (though it did approve one state-issued certifica-




tion), and has no present intention of doing so.




       Mien EPA receives a request for certification of water pollution




control equipment, it is routed to Dr. Walter Lee,  Staff Environmentalist,




Envorcement Division, U.S. Environmental Protection Agency Region III,




Curtis Building,  6th and Walnut Streets, Philadelphia,  PA  19107.  He




collects any supplementary information that may be  required and performs




the technical review.  His review consists of:









       1.  Determining which regulations apply to the applicant




       2.  Determining whether the contents of the  consent order satisfy




           best practicable control technology requirements




       3.  Checking consultant-supplied specifications  for gross errors, and




       4.  Issuing the certification if controls are necessary and the  sub-




           mitted plan appears adequate.









       About half of the applicants have had their  size eligibility




determined by SBA prior to application; doubtful cases  are checked by EPA




prior to certification.   SBA does not begin to process  loan application




until after certification is issued by EPA.




       EPA docs not interpret the regulations on not certifying extraneous




equipment strictly.  One way that EPA could stop extraneous equipment
                               III-3

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is by analyzing costs.   However,  EPA does not  examine  proposed  costs for




reasonableness.'




       Liability of the agency for improper certification for adequacy




has been discussed, and is protected against by inserting qualifying




clauses in certification statements.
                               III-4

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                               DELAWARE









       Delaware would issue certifications for air pollution control equip-




ment, but there have been no applications as of mid-1976.   Even consider-




ing the fact that Delaware is a small state with few small manufacturing




concerns, no applications indicates little public awareness of the com-




pliance loan program.  The Department in charge of certification is the




Delaware Department of Natural Resources and Environmental Control,




Dvision of Environmental Control,  Air Resources Section,  Tatnall Building,




Dover, DE  19901.




       Certification for SBA water pollution control loans should be




requested from EPA's Region III office.
                                    I1I-5

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                               MARYLAND









       The Maryland Department of Natural Resources handles all




water pollution control certifications for Maryland,  having been dele-




gated certification authority by Region III;  the address is Maryland




Department of Natural Resources, Water Resources,  Water Resources Ad-




ministration, Water Permits Division, Tarries Office  Building, Annapolis,




MD  21401 (301)267-5821.  Despite various other forms of publicity, only




four reqye'.s'ts for certification were received  (only one of which was pur-




sued by the applicant to completion).




       Maryland has not issued certification  regulations; they follow the




federal regulations.  Once all the necessary  information has been submitted,




the application is reviewed in depth commensurate with the complexity




of the project.  If the costs proposed were exhorbitant, the application




would not be approved, but costs are not otherwise certified.   All appli-




cations are processed and then sent to SBA; size eligibility is not a




prerequisite for the agency to perform certification.




       Liability for faulty certification for adequacy has been considered




by the agency; certification letters contain  conditions to protect




the agency rights.  If a project proved to be inadequate, enforcement




would be suspended; but compliance would eventually be required.




       Air pollution control certification is obtained through the Maryland




Department of Health and Mental Hygiene, Bureau of Air Quality and Noise




Control, Division of Engineering, Permits Section 201 W. Preston Street,




Baltimore, MD  21201 (301)583-3147.




       Maryland follows the federal certification regulations (Appendix




B) as they have none of their own.  One modification  of the federally determined
                                III-7

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procedures that Maryland follows for air pollution  control  is  to link




certification to permits to construct.   (Maryland has  a set of procedures




for companies to-obtain permits to construct  new air pollution control




systems).   Certification for SBA loans  is issued after the   permit to




construct  is obtained.




       The same review procedures used for issuing a Maryland permit to




construct  control devices is used for issuing the certification letter.




The letter can be issued prior to any SBA processing of the loan or size




eligibility determination.   Costs are  not considered.
                               III-8

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                             PENNSYLVANIA








       The Pennsylvania Department of Environmental Resources (DER) is responsible




for certifying air pollution control projects in Pennsylvania.   There are




no certification regulations established in the State of Pennsylvania; however,




the Pennsylvania Department of Environmental Resources, Bureau of Air




Quality and Noise Control, Division of Abatement and Compliance administers




the loan certification program.  The location of this office is the Fulton




National Bank Building, 3rd and Locust Streets, Harrisburg, PA 17120,




(717)-787-4324.  As with other State programs,the certification procedures




are only applicable to air pollution control. Certification for water




pollution control is obtained from EPA (see Section III).




       In Pennsylvania, each violation notice that is sent to a company




is also sent to the Pennsylvania Commerce Department which in turn sends




brochures to the company describing SBA and other financial assistance




that is available.




       DER's system is unusual in that each regional DER office (there are 7)




processes the requests arising in that region.  The regional offices are




independent of headquarters in Harrisburg and have received little guidance




from it, so each region may adopt its own procedures for issuing certifi-




cations.  Four requests for certification have been processed by DER: two




of those were by the Norristown, PA office, so its procedures are the ones




detailed.




       Requests for certification at Norristown are routed directly to




the Regional Engineer, N.  Rao Kona.   SBA size eligibility must  be estab-




lished before a certification request will be processed.   If the company
                                  III-9

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has received an air pollution citation,  this  is  construed  as  a determination




of necessity.  If a permit to construct  the pollution  control devices  has




been issued, this is equivalent  to a determination of  adequacy;  a permit




to construct will not be issued  unless the plant will  be in compliance




with all state environmental regulations.   The processing  time is from 4 to




6 weeks.  The engineering evaluation is  done  in  the context of issuing




a permit to construct and certification  will  not be issued without  one.




The staff use vendor guarantees^process  information equipment specifications,




and emission data to determine the necessity  and adequacy  of  the equipment.




DER does not consider the reasonableness of the  costs  of control for




certification purposes.




       DER has considered the problem of improper certification. Their




solution is to use qualifing statements  in certification letters and




conditional permits to construct.




       Certification for SBA water pollution  control loans should be




requested from EPA1s Region III office.
                                111-10

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                               VIRGINIA









       The State of Virginia will certify air pollution control equipment




for SBA financing.   Certification can be obtained from the Virginia Air




Pollution Control Board, Enforcement Division, Room 1106,  Ninth Street




Office Building, Richmond, VA  23219 (804)786-3248.  The state has no




certification regulations of its own for SBA financing.  The board performs




a cursory review of the application for the adequacy and necessity of the air




pollution control method.  Compliance with other environmental regulations




is not required for certification.




       Certification for SBA water pollution control financing should be




requested from EPA's Region III Office.
                                  III-H

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                           WEST VIRGINIA









       The State of West Virginia will  certify air pollution control systems




for SBA financing.  State does not have  specific regulations for such cer-




tification.  The responsibility for certification lies with the West Vir-




ginia Air Pollution Commission, Compliance Division,  1558 Washington Street




E., Charlestown, West Virginia  25311 (304)348-4022.   Some administrative




procedures have been established for certification when it does occur.




Processing of certification request is  expected to take about 30 days.




It will be conducted by a mechanical engineer plus industry expert for com-




plex certification cases.  The reviewing engineer will rely upon process




waste and equipment specifications provided by the company.  To date,




no request for certifications has been  made.




       Certification for SBA water pollution  control  loans should be




requested from EPA's Region III office.
                               111-13

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IV.    STATE FINANCIAL ASSISTANCE PROGRAMS FOR POLLUTION CONTROL









       Nearly all states in the country have financial assistance programs




for pollution control, often related to state or local taxes payable.  Several




states also have their own loan programs for pollution control.  The effect




of these programs is to add to the reduction in pollution control costs achiev-




able by the Federal assistance programs.  However, their benefits are typically




not as large as those derived from the Federal financial assistance programs.




       This section will describe the state financial programs for each state




in Environmental Protection Agency Region III, i.e., Maryland, Delaware,




Pennsylvania, Virginia and West Virginia.  The description of each state




program will be similar to that used with the Federal program descriptions.




       The general categories of state programs typically include the following:









           •  Industrial development bond authority




           •  Tax exemptions, such as sales, use, and property




           •  Accelerated depreciation




           •  Grants or loans to municipalities




           •  Investment tax credits for pollution control equipment.









       In addition, the states are often involved in Appalachian Regional




Commission programs.  The Appalachian Regional Commission (ARC) was created in




1965 to increase the economic vitality of the areas covered by the Appalachian




mountains.  One of the many programs created by ARC was an environmental grants




program which included water and wastewater treatment facilities and solid waste




facilities.  For example, a municipality can receive anywhere  from 5 to 25°6
                                  IV-1

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of the cost of construction of wastewater treatment facilities.   However,




not all of the funds in a fiscal year will go to wastewater treatment projects,




since other pollution control such as mine subsidance and acid mine drainage




also qualify.  The program is not a very large one in any of the states.   For




example, in fiscal year 1977, there was approximately $14 million in Pennsylvania




to be distributed among all the eligible environmental programs.   There  are




thriteen states which each administer projects within its boundaries; these include




Maryland, Pennsylvania, Virginia, and West Virginia.   When ARC grants cover indus-




trial waste treatment, the industry is not required to repay.
                                      IV- 2

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                               Delaware








       Delaware's financial assistance for pollution control includes the




following programs:  authority to use industrial development bonds, sales and




property tax exemptions, accelerated depreciation, and grants to municipalities.








       1.  Industrial Development Bonds








       Delaware permits industries to use industrial development bonds (IDBs) for




pollution control capital expenditures.  For a description of how the IDE pro-




gram operates,the reader should refer to Section II.B.  Since 1973, there have




been nine Industrial Development Bond issued by the State of Delaware as revenue




bonds, i.e., the state does not guarantee the bonds.  This program has been used




by seven companies.  The size of issues has ranged from $1 million to $32 million




and the total amount of issued bonds is $66.48 million.




       The State of Delaware also has a program for guaranteeing industrial




development bonds; however, it is not presently used for pollution control ex-




penditures- The guarantees are used for job creation purposes.   Legally, it




appears that the guarantee could be used for pollution control  IDBs.




       There have been no private placements of pollution control industrial



development bonds in the State of Delaware, as there have been in the other




states within Region III.




       The IDB program is conducted by the Department of Community Affairs and




Economic Development, the Division of Economic Development located at 45 The




Green, Dover, Delaware.




       There is a charge from the State of Delaware for using industrial develop-




ment bonds.  The fee schedule is reproduced herein as Appendix I.  In addition
                                 IV-3

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to these charges,  industries must deposit  $5,000  with  the  Secretary of Community




Affairs* and Economic Development when their application for industrial financing




is approved.   Upon sale of the bonds the deposit  will  be returned in full to the




company.  If the bonds are not sold, or if the company terminates the project,




the deposit minus  the expenses incurred by the Department  will  be returned to




the company.








       2.  Tax Exemptions








       Pollution control equipment is exempt from County,  Municipal and school




taxes of the three counties in Delaware.   There is no  sales tax for the State




of Delaware.   The  property tax exemption includes all  types of  pollution control




expenditures by all companies.  The exemption is  a permanent part of the tax




laws.








       3.  Accelerated Depreciation of Pollution  Control Equipment








       The State of Delaware has a corporate income tax which includes accel-




erated depreciation of pollution control equipment. The computation of the




state tax starts from what the company reports as federal  taxable income, thus




companies will receive an additional benefit under the state corporate income




tax.  The state benefits do not include an investment  tax  credit since the




state does not have such a credit.  The use of the federal investment tax credit




by a company is not affected by the absence of a  state credit.




       Special forms, certification and the like  are not required to obtain this




state privilege for pollution control equipment.
                                 IV-4

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       4.  Grants to Municipalities








       The State of Delaware contributes a minimum 10% grant for eligible




costs of municipal treatment works.  Eligible costs are defined in the same




way as the Federal EPA construction grants program.  The one exemption is that




the acquisition of real property is not included in the project cost.   The 10%




grant program does not require industries to repay its proportionate share of




the construction costs identifiable with the 10% grant.  The funding level of




the State grant program has been sufficient to cover the demand by municipal




wastewater treatment plants.  One reason for this sufficiency is the consider-




able delays that have been experienced by municipalities in receiving federal




construction grants for the financing of the remainder of the facility.  State




grant program funds were authorized several years ago and are available when




federal funds are provided.
                                IV- 5

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                                Maryland









       The State of Maryland has two Industrial  Development Bond financing




programs for pollution control,  a sales tax reduction for pollution control




equipment, a service program for undertaking pollution control functions,  and a




real property tax exemption for pollution control equipment.   In addition the




State of Maryland has its own grants program for municipal wastewater treatment




plants.  The State also administers the Appalachian Regional  Commission's




supplemental grant program for municipal wastewater treatment facilities.









       1.  Industrial Development Bonds









       The State of Maryland has one Industrial  Development Bond program which




operates as explained in Section II.B.   Revenue  bonds are issued by one of




the political subdivisions of the State of Maryland on behalf of corporations




installing pollution control equipment.




       Maryland's other program is conducted through the Maryland Industrial




Development Financing Authority (MIDFA) which may include pollution control




equipment if it is a part of the financing for a larger project primarily




intended for jobs creation.  Under the  MIDFA program, the state can guarantee




up to 90% of the financing, making the  bonds effectively general obligation bonds




of the State.  This type of bond is likely to have lower interest rates than




a revenue bond since it is backed by the credit  of the state.  The remaining 10%




must be raised by the municipality or the company itself.




       Under the Industrial Development Bond program conducted through the pol-




itical subdivisions, no fees are charged for the applicant; fees are charged under




the MIDFA Program.  The fees in the latter program are one-half of one percent
                                 IV-7

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per year on the declining balance of the financing.   This fee can be waived




when the unemployment rate in the county is greater  than 1% above the national




average.




       Many private placement pollution control IDB  financings have been




conducted in the State of Maryland under the MIDFA and the regular Industrial




Development Bond program.  The minimum size of the private placement issues has




been approximately $90,000.




       There are no standard forms used under the Industrial Development Program;




there are in the Maryland Industrial Development Authority Program.




       The contact for the regular IDB program is the Director, Division of




Business and Industrial Development, Maryland Department of Economic and




Community Development, 2525 Riva Road, Annapolis, MD  21401; (301) 267-5514.




       The contact for the MIDFA program is Executive Director, 1223 Munsey




Building Calvert and Fayette Streets, Baltimore, MD   21202; (301) 383-4348.









       2.  Sales Tax Exemption









       The State of Maryland permits pollution control equipment to be classified




as manufacturer's machinery and equipment.   As such, it is entitled to a 50%




reduction in the sales tax, which means a 2% rate as opposed to a 4% rate.




This program is administered by the Retail Sales Tax Division of the State's




Controllers Office located at 301 W. Preston Street, Baltimore, MD  21201.  The




reduction in sales tax is permitted when the pollution control equipment is man-




dated by the county, state or federal government.  The company need not show proof




when they are filing the sales tax forms that such a mandate has been required.




The company is, however, subject to audit to determine the mandated aspects of the




installation.  There is no reduction in the sales tax benefit for pollution control




equipment which returns a saleable by-product.






                                IV- 8

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The value of the pollution control equipment that is classified as manufac-




turing machinery and equipment can include the cost of foundation for the




equipment.









       3.  Property Tax Exemption









       Maryland permits pollution control machinery and equipment to be exempt




from state and/or local personal property taxes.   The tax assessors provide




the exemption by not placing the value of the equipment in the assessment




base.  No certification is required from a regulatory agency.




       There is no such state exemption for real  pollution control property




taxes.




       Questions on taxes should be directed to the Department of Assessments




and Taxation, State Office Building, Baltimore, MD  21201.









       4.  Maryland's Environmental Service









       The Maryland Environmental Service (MES) conducts pollution control




functions for municipalities or industry.  MES has not yet performed this function




for industry.  The way in which the service works is to fund itself through tax




free bonds at a low interest rate due to the State's high credit standing.  The




proceeds of the issue are then used to build and  operate the pollution control




facility for an industry or municipality.  The Service then charges the user for




the system on a lease basis.




       An industry of sufficient credit strength  can request a political sub-




division to issue Industrial Development Bonds in the company's name and based




on it's credit position.  However, if the bond rating of the company is less than
                                IV-9

-------
that of the Maryland Environmental Service,  the MES should be considered.




       The address and phone number of the Maryland Environmental Service




is State Office Building,  Annapolis,  MD  21401  (301)  269-3351.








       5.  State Grants and Loans to Municipalities








       The State of Maryland provides one-half of the  local share of construc-




tion costs of municipal wastewater treatment plants.   One half of the local share




amounts to 12.5% of total  costs,  which along with a federal grant amounts to




87.5% of costs covered by  grants.  The state does not  have an industrial pay-




back provision when the grant covers wastewater treatment costs for industrial




waste.




       The state does not  have grants for municipal treatment plant operating and




maintenance costs.




       The state's grant program is funded annually by state legislation and




has been adequate in covering the needs of municipalities.




       "Hie State does have a loan program for communities that are having




difficulty obtaining the final 12.5% of construction costs that is their respon-




sibility to provide.  Industrial payback may be a part of such a loan program,




depending on the municipality's intention to repay the loan from taxes or from




allocated treatment costs.








       6.  Appalachian Regional Commission








       In 1975, Maryland administered ARC grants of approximately $1.2 million




for water and wastewater treatment projects.
                                 IV-10

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                             Pennsylvania









       The State of Pennsylvania has the tax-free Industrial Development Bond




financing program for pollution control equipment, a sales and use tax exemp-




tion, rapid amortization of pollution control equipment for state income tax




purposes, and a capital stock tax exemption and franchise tax exemption for




pollution control equipment.  Pennsylvania has a grant program for the municipal




wastewater treatment plant construction cost of low income areas.   The state




also administers the Appalachian Regional Commission's grant program for munici-




pal water and wastewater treatment facilities.









       1.  Industrial Revenue Bond and Mortgage Program









       In Pennsylvania, practically all sized companies can obtain tax-free




financing for pollution control equipment.  This can be done under the




Industrial Revenue Bond program which is similar to that which is  described in




Section II.B., or under a mortgage financing program established under the




Pennsylvania Industrial Development Authority (PIDA).   Land and buildings can




be financed under the PIDA Mortgage Program; equipment can be financed under




the Industrial Revenue Bond program.




       All applications for tax-free industrial development type financing of




pollution control equipment are channelled through a county Industrial Develop-




ment Authority.   After approval at the county level, further approval must




also be obtained from the Director of Economic Development of the  Pennsylvania




Department of Commerce.  A fee for application is charged by most  counties.  The




amount of the fee will differ from county to county; where it is higher it




effectively minimizes the dollar expenditures that can be attractively financed




under the Industrial Development Bond program.  However, by and large, pollution






                                   IV-11

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control equipment expenditures of less than $100,000 can be financed under

a tax-free loan program,  and in many instances  expenditures as  low as $25,000

or $30,000 have been financed by private placements  on a tax-free basis.



       2.  Sales and Use  Tax Exemptions



       Until March,  1977, the State sales and use tax exemption for pollution

control equipment was only applicable if the company was recycling the materials

captured by the pollution control equipment.  Thus when the pollution control

equipment merely removed  the waste material without  some form of recycling,  the

equipment was not considered to be eligible for the  tax exemption.  Now,  however,

the State sales and use tax exemption will apply to  virtually all pollution

control equipment.  A precise definition of pollution control equipment cannot

be determined as of the date of this writing since comments are being received by

the State as to the definition of pollution control  equipment for this exemption

program.  Certification from a State pollution  control agency is not required

for this program.
       3.  Rapid Amortization of Pollution Control Equipment for State Income
           Tax Purposes
       The State permits pollution control equipment to be deducted from State

income taxes in the same fashion as the federal government; that is, rapid amortiz-

ation over a 60 month period.  The one difference between the State and Federal

income tax deduction programs is that the State does not have an investment tax

credit.  Pollution control equipment must be certified by the Department of

Environmental Resources.  This has produced a problem in that the Department of
                                  IV-12

-------
Environmental Resources will not certify equipment until it is operating.




For a company that takes up to two to three years to install pollution control




equipment, this prevents them from taking immediate deductions on the portions




of the plant that are installed.




       There is no penalty in the State income tax deduction provision for by-




product recovery as there is in the Federal program.








       4.  Franchise Tax Exemption








       A franchise tax is a charge paid by a company for the privilege of con-




ducting operations in a state.  The tax is generally assessed as a percentage of




a corporation's net worth, income or assets.  In Pennsylvania the tax is applied




to asset value.   For franchise purposes, the exemption for pollution control




equipment is claimed by excluding the original cost value of the device from the




numerator of the tangible property fraction on which the tax is computed.




       In order to obtain the franchise tax exemption,a schedule must be furnished




by the company reflecting the location, description and the amount of each pollu-




tion control device.   In addition, a copy of the certification issued by the




Pennsylvania Department of Environmental Resources must be submitted annually in




support of the exemption.  When a Federal certification or a notice of intent to




certify has been issued, a copy must also be submitted for the exemption.








       5,  Capital Stock Tax Exemption








       Pennsylvania charges companies a capital stock tax.  In order to compute




the capital stock tax for a company, the average net book value of pollution con-




trol equipment is deducted from the average total assets.  In order to obtain the
                                  IV-13

-------
capital stock tax exemption,  the same procedures as explained for the franchise




tax exemption must also be followed by a company.








       6.  State Grants to Municipalities








       The State has a 5% grant program for the construction of a municipal




wastewater treatment plant.  These grants are applicable to low income areas.




The State examines all Step 1 and Step 2 applications for Federal construction




grant funding in order to determine which municipalities are considered low




income by their criteria.  The municipalities are then offered the 5% supple-




mental grant.  An industry does not have to pay bade a portion of the grant.




From 1973 to 1976, there have been approximately ten projects that qualify under




this program totalling approximately $1 million in value.
       7.  Appalachian Regional Commission








       In 1975 Pennsylvania administered ARC grants of approximately $5.2 million




for water and wastewater treatment projects.
                                  IV-14

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                       Commonwealth of Virginia






       The Commonwealth of Virginia has the following financial  assistance




programs for pollution control:   industrial development bonds,  the permission




for local municipalities to exempt pollution control  equipment  from property




taxation, a sales and use tax exemption,  and a rapid  amortization and investment




tax credit provision for Commonwealth income tax purposes.   The  Commonwealth




of Virginia also administers the federal  Appalachian  Regional Commission grant




program for municipal water and wastewater treatment  facilities.   Virginia is




also one of five states in the Coastal Plains Regional Commission which




occasionally provides supplemental grants for wastewater treatment.









        1.  Industrial Development Bonds Program









        Virginia, as do all EPA Region III states, permits pollution control ex-




penditures to be financed by tax-free Industrial Development Bonds.  Although




the Commonwealth has general authority over the program, the bonds are issued




through the local authorities.  Fees are not charged by the local authorities




to cover administrative costs, though charges are made to cover direct costs




connected with  the bond issue.  However,  some local authorities within Virginia




are beginning to more heavily promote the Industrial Development Bonds program.




To cover such expanded operations, some of the authorities now charge fees.




        The conduct of the Industrial Development Bond program in the Commonwealth




of Virginia is  as described in Section II.B.  IDBs can either be sold publicly




or privately.   There is no information at the Commonwealth level as to the




minimum size issue of Industrial Revenue Bonds placed privately.









        2.  Property Tax Exemptions









        The Commonwealth of Virginia permits local municipalities to exempt






                                     IV-15

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pollution control facilities from local property taxes and other ad valorem




taxes.  The property must be certified by the appropriate air and water




pollution control authorities.   Certification procedures for this purpose are




not as rigorous as they are for rapid amortization for federal income tax




purposes or for SBA financing certification.









       3.  Commonwealth Sales and Use Tax









       The Commonwealth of Virginia exempts pollution control facilities




and equipment from Commonwealth sales and use taxes,  as are all manufacturing




facilities and equipment.









       4.  Commonwealth Income Tax Program









       The Commonwealth of Virginia permits pollution control equipment to be




treated for state income tax purposes in the same manner as pollution control




equipment is treated for federal income tax purposes.  In other words, a company




in the Commonwealth of Virginia can use rapid amortization as described in Section




11.A  for state income tax purposes.  On the other hand, since the Commonwealth




of Virginia does not have a corporate income tax credit, the companies cannot use




the same 50 percent investment tax credit with rapid amortization that they can




use for federal tax purposes.









       5.  Grants to Municipalities









       In fiscal year 1977, the legislators of the Commonwealth of Virginia did




not provide grant funds for the local construction costs of municipal wastewater




treatment facilities.  In the previous year there was a_grants program under





   ,  '                              IV-16

-------
which municipal wastewater treatment facilities could obtain a 5% grant,








       6.  Appalachian Region Commission








       In 1975, Virginia administered ARC grants of approximately $1.8 million




for water and wastewater treatment projects.








       7.  Coastal Plains Regional Commission (CPRC)








       The CPRC consists of Virginia,  North Carolina,  South Carolina,  Georgia




and Florida and was established under the Public Works and Economic Develop-




ment Act of 1965.   Fiscal 1976 and 1977 budgets each  totaled approximately




$10 million.   The  vast majority of funds are for development projects;  only




small amounts are  for environmental projects.   The CPRC is legally capable of




providing funding  for demonstration pollution control  projects of a hardware




nature,  but have not to this date.  The Commission has provided supplemental




construction grants for municipal wastewater systems,  but at modest amounts




of approximately $150,000 for each of the last two years.  Virginia was not




a recipient of such funds.
                                  IV-17

-------
                            West Virginia









       The State of West Virginia offers pollution control the following




financial assistance programs:  an industrial development authority financing




program and a tax credit against business and occupational taxes, a tax deduc-




tion against State Corporate Income Taxes, the absence of a sales tax for pollu-




tion control and other manufacturing equipment, and a personal property tax




exemption.  The State of West Virginia also has its own grant program to pay




a portion of the municipal wastewater construction projects and also administers




the Appalachian Region Commission's grant program for water and wastewater




treatment facilities.









       1.  Industrial Development Bonds









       Industrial Development Bond financing for pollution control systems is




conducted by corporations through the various industrial development authorities




of the counties and local municipalities of West Virginia.  The program is




basically conducted as described in Section II.B.




       Application fees are not charged by the local authorities for processing




and issuing poolution control IDBs.  Private placement of pollution control




IDBs with banks or insurance companies is used extensively.  The state does




not compile specific records, but private placements of as low as $50,000 are




known to have occurred.




       The State Department of Commerce does lend money to local authorities




for the purpose of buying up to 30 percent of the cost of a project.  Some




projects may include pollution control, but the major intent of such loans is




to create new jobs.   Therefore, as a rule, projects for pollution control only




are not funded by this program.





                                  IV-19

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       2.  Sales Tax Exemption



       The btate of West Virginia has  a  consumer  sales  tax program.  However,

pollution control and other manufacturing  equipment  are not  subject  to such tax.
       3.   Personal Property Tax Exemption




       Under the State of West Virginia property  assessment procedures,  pollu-

tion control equipment is given an 85% tax  exemption  for  its  cost plus installa-

tion value.   This exemption is conducted  as follows:   The State  Tax Department,

when it receives notice of certification  by one of the pollution control agencies,

visits the plant and assesses the value of  the personal property that is used for

pollution control equipment.  That value  (cost plus installation)  is then reduced

by 85%.  The reduced value is then further  reduced by the general assessment
                                         fc
rate of 55%; therefore, only 7-1/2 to 8%  of the value of  the  pollution control

equipment including installation is subject to the personal property tax

of the local authorities.  There is no such exemption for pollution control

equipment that is considered land and improvements„




       4.   State Tax Credit for Business  and Occupational Tax




       The State of West Virginia has a revenue tax called the Business and

Occupational Tax.  Pollution control equipment expenditures are treated as a credit

against the tax liability under that tax  program, although there is no legislation
                                    IV-20

-------
specifically providing the credit.   In fact,  its treatment as a credit has




differed somewhat over the years.   Past State of West Virginia administrations




have only permitted the credit when the company's financial position was




considered marginal.  The matter is currently under review although presently




all pollution control equipment is  eligible for the tax credit.




       Equipment with a life of 8 years or more is allowed to have a 10%




Business and Occupational tax credit per year for the useful life of the




equipment.  A $100,000 piece of equipment would result in the company's




deducting $10,000 from the taxes that it owes under Business and Occupa-




tional Tax program.  The amount of the tax credit in any one year for any




one company is limited to 60% -of its tax liability.  There is no carry for-




ward of any benefits not able to be used in any one year.









       5.  State Corporate Net Income Tax Deduction









       The State of West Virginia does have a corporate net income tax,




and by law has declared pollution control equipment as eligible for a




deduction.  The corporate net income tax is based on a company's federally




adjusted income.   Starting from this point, the State then applies its own




systems of deductions or additions  to that federal income base.  Pollution




control is one of the deductions.   The program allows for the entire amount of




the cost of pollution control equipment to be deducted from the corporate net




 income tax  in  one  year.   If  the size  of  such  a  reduction should result  in




 a  loss for  the company,  the  amount  of the  deduction  can  be  carried forward




 for up to three  years.   Although this  tax  deduction  program for pollution




 control  equipment  appears  significant, the amount  of cororate  net  income
                                 IV-21

-------
taxes that corporations  pay on  a yearly  basis  is minimal.








       6.   State Grant Program  for  Municipal Wastewater  Treatment  Facilities








       The State of West Virginia has  two programs  to  assist  municipalities




in building wastewater treatment facilities.   The first  program is to pro-




vide loans to municipalities to enable them to conduct the  step 1  and




step 2 processes under the Federal  construction grant  program.   These steps




essentially plan the type of waste  water treatment  facility that will be




used.  The municipality  can repay the  loan  out of the  proceeds  of  the Federal




construction grant that  is subsequently  received.




       In the other program, the State contributes  5%  of the  eligible cost




of construction as a grant.  There  is  no payback provision  on the  part




of the municipality even if some of the  funds  in essence are  for the treat-




ment of industrial waste.  The  State is  also in the process of  implementing




a special grant program  for low income municipalities.  This  program would




call for 15% grants.  The latter program is authorized by legislation of the




State of West Virginia but is not yet  implemented;  therefore, the  status of




industrial payback is not yet determined.








       7.   Appalachian Regional Commission








       In 1975 West Virginia administered ARC  grants of  approximately $1.7




million for water and wastewater treatment  projects.
                                 IV-22

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                                     APPENDIX A
                        RAPID AMORTIZATION CERTIFICATION FORM
                                                                           FORM APPROVED
                                                                           OMO NO. 153-ROOI3
                              ENVIRONMENTAL PROTECTION AGENCY
                 APPLICATION FOR CERTIFICATION OF POLLUTION CONTROL FACILITY
                   (Pursuant to Section 169 of the Internal Revenue Code of 1954, as amended)
TO: REGIONAL ADMINISTRA TO R (Region, Street, City. State,
Zip Coda):
                                            THRU: APPROPRIATE STATE WATER OR AIR POLLUTION
                                            CONTROL AGENCY fA'a.719 ol Sta'.o Agency, Street, City, State,
                                            Zip Code):
                Application is hereby made for certification of

           the pollution  control facility described herein.   The

           following information is submitted in accordance with

           provisions of  Part 602 of Title  18 of the Code of

           Federal  Regulations  (Volume  36,  Federal  Register,

           page 9509, May 26, 1971) and to  the best of my know-

           ledge and belief is  true and correct.
 APPLICANT
 I G N A r U H h.
                                            STREET ADDRESS. CITY, STATE, ZIP CODE
              NOTE: READ ACCOMPANYING INSTRUCTIONS CAREFULLY PRIOR TO COMPLETING FORM.
EPA Form 3300-1 (9-71) (Page 1)
                                        ORIGINAL
                                          A-l

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                                                                                                                    FORM APPROVED
                                                                                                                   OMB NO. 1 Sb- ROD I 3
                                   SECTION A - IDENTITY AND LOCATION OF CONTROL FACILITY
I. FULL BUSINESS NAME OF APPLICANT
                                                                    2.  TYPE OF OWNERSHIP

                                                                       Q  INDIVIDUAL

                                                                       Qj PARTNERSHIP

                                                                           CORPORATION
                                       OTHER (Describe):
3.  PERSON TO CONTACT REGARDING THIS APPLICATION (Name and Title)
                                                                                                             TEL EPHONE
   ADDRESS (Street, City, Stale, Zip Code)
4.  PERSON AUTHORIZED TO RECEIVE CE R Tl Fl CATION ([fame and Title)
   ADDRESS (Street, City, State, Zip Coda)
s.  BUSINESS NAME OF PLANT (It different trom Item 1) (Street, City, State, Zip Coda)
                                               6.  APPLICANT'S
                                                  EMPLOYER
                                                  IDENTIFICATION NO.
                                          SECTION B - DESCRIPTION OF CONTROL FACILITY
I.  DESCRIBE THE FACILITY FOR V.HICH CERTIFICATION  IS SOUGHT.  INCLUDE TYPE OF EQUIPMENT. MANUFACTURER AND MODEL
   NUMBER.  SU 0M! T DESIGN CRITERIA.  ENGINEERING REPORT AND/OR PERFORMANCE SPECIFICATIONS V.HICH DESCRIBE
   FUNCTION AND OPERATION OF FACILITY:
2. IS FACILITY IN OPERATION?
           YES
                                    A. IF "YtS" DATE  FACILITY
                                      WAS PLACED IN  OPERATION
       B. IF "NO"  DATE FACILITY
          IS EXPECTF.D TO BE
          PLACED  IN OPERATION
3.ir FACILITY CONSISTS OF A
  BUILDING. IS IT EXCLUSIVELY
  FOR CONTROL OF POLLUTION
                                                                                                          D
                                   SECTION C - DESCRIPTION OF COMMERCIAL PROCESS OR ACTIVITY
I. DESCRIBE PROCESS OR ACTIVITY IN  CONNECTION WITH WHICH F ACILITY 15 OR WILL  BE USED.
2.  STANDARD INDUSTRIAL CLASSIFICATION ISIC) CODE NUMBER
 3. DATtf  THAT fc" A CH PLANT OR OTHER  PROPERTY IN COr.'J F-CTION WITH WHICH FACILITY  I5ORWILL REUSED, COMMENCCDOPFRATIO

                                                                                                                       DATE
                                                PLANT OR PROPERTY
 EPA Form 3300-] (9-7!) (Poge 2)
ORIGINAL

    A-2

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FORM APPROVED
OMB NO. I58-RI003
SECTION C - DESCRIPTION OF COMMERCIAL PROCESS OR ACTIVITY
4A. IF FACILITY IS OR VI
PLANTS OR PROPER
JANUARY t, 1969, ST
PROPERTY(IES) IN C
ILL BE USED IN CONNECTION WITH MORE THAN ONE PLANT OR PROPERTY, AND IF ONE OR MORE OF THE
TIES IN CONNECTION WITH WHICH THE FACILITY IS OR WILL BE USED WAS NOT IN OPERATION PRIOR TO
ATE THE PERCENTAGE OF THE COST OF FACILITY WHICH IS ALLOCABLE TO THE PLANT(S) OR
PFRATION PRIOR TO THAT nATF. , y.


40. DESCRIBE THE REASONING AND FURNISH THE DATA USED TO ARRIVE AT THE PERCENTAGE GIVEN IN RESPONSE TO ITEM 41A).
5A. IF FACILITY PERFORMS A FUNCTION OR FUNCTIONS IN ADDITION TO THE ABATEMENT OF POLLUTION, STATE THE
PERCENTAGE OF THE COST OF FACILITY ALLOCA3LE TO THE ABATEMENT OF POLLUTION 	 »
SB. DESCRIBE THE REASONING AND FURNISH THE DATA USED TO ARRIVE AT THE PERCENTAGE GIVEN IN RESPONSE TO ITEM 51A).
SECTION D - WASTEWATER CHARACTERISTICS (To be completed only in connection with focilities for the control of water pollution)
DESCRIBE THE EFFECT OF POLLUTION CONTROL f ACILITY IN TERMS OF QUANTITY AND QUALITY OF EFFLUENT
OR WASTEWATER DISCHARGED AND OF WASTES OR BY-PRODUCTS REMOVED, ALTERED OR DISPOSED OF. IF FEASIBLE,
ATTACH PROCESS FLOW OR SCHEMATIC DIAGRAM WITH MATERIAL BALANCES OF THE WASTE OR WASTEWATER STREAM
OR DISCHARGE. REPORT EITHER ON ACTUAL BASIS OR, IF FACILITY IS NOT YET IN OPERATION, ON DESIGN BASIS
(Use Standard Units —pounds/gallon, gra-ns/hter, ppm, etc.)
1. HOURS PLAS.T OR PROPERTY IS IN OPERATION! 8. Per Month: Mil.
b. Per Year: Min.
2. WASTEV. ATER
D! SCH AP G~ IN •
(A) GALLONS PEP
Ml NU TE, ( 3) MIL-
LIONS OF GALLONS
PER MO N TH.



WITHOUT POLLUTION CONTROL FACILITY WITH POLLUTION CONTROL FACILITY







3. a



l.r-

3.,1
1 f

t {

,
T h

3 i



MinT , . Max. 	 	 Aver. , „

Min. „ „ Ma-, . Av f.

Mm. . , _ Mfiv. _ A \ P.

Mir- , , Mnvr .. AVI'. . ,


M -
""*
MI r). Mn v. A- .«-,


Mm M'iv A" •

ML M'IX • A -'

Mm. _ . . Mnv. Av^.



Min. Max. A\ g

Mm. . Mnv. A^




Mm. _ 	 . Ma--:. Ayr-.






EPA Form 3300-1 (9-71) (Page 3)
ORIGINAL

-------
                                                                                                               FORM APPROVED
                                                                                                              OMB NO. 158-R1003

4. DtSCmBE METHOD (GRAB OR COMPOSITE] AND FREQUENCY OF SAMPLING AND METHODS USED TO DETERMINE QUANTITIES OF
  POLLUTANTS.
5. IS FACILITY A PRETREATMENT FACILITY TO PREPARE WASTEWATER FOR RECEIPT  BY ANOTHER FACILITY, PUBLIC OR
  PRIVATE,  FOR FURTHER TREATMENT? IF "YES", SKIP ITEMS 6, 7 AMD 8 AND IDENTIFY RECEIVING FACILITY.     Q YES  [~|NO
6. lOtNTIFY  Twg BODY OR STREAM OF WATER INTO WHICH WASTEVYATER FROM THE PLANT OR PROPERTY, IN CONNECTION WITH
  WHICH THE FACILITY IS USED, IS OR WILL BE DISCHARGED.
7. DESCRIBE LOCATION OF DISCHARGE OR OUTFALL WITH  RESPECT TO RECEIVING WATERS.
  IS THE RECEIVING BODY OR STREAM OF WATER A NAVIGABLE WATERWAY OF THE  UNITED STATES OR A TRIBUTARY THEREOF'
  (J YES  [_J NO     IF "NO," PROCEED TO ITEM 9.

  A. IF "YES" HAS A U.S.  ARVIY CORPS OF ENGINEERS DISCHARGE PERMIT  BEEN APPLIED FOR?  [ 1  YES   [ 1  NO     IF "NO,"
     EXPLAIN, THEN PROCEED TO ITEM 9.



  B. IF AN3V/ER TO ITEM B A IS "YES" HAS A U.S.  ARMY CORPS OF  ENGINEERS DISCHARGE PE RMI T BEEN 1CSUED? Q YES  Q  NO
     tl) IT "YES," ATTACH COPY OR PFOVID^ PERMIT N U V 3 g p.         	OMI T ITEM 9.
     (2) I T "NO," EXPLAIN,  GIVING DATES OF ANY OFFICIAL ACTION I'll TH  RESPECT TO  APPLICATION.
3. IF ITEM 63 HAS MOT BEEN ANSWERED "YES," IDENTIFY APPLICABLE STATE AND LOCAL WATER POLLUTION CONTROL
   REQUIREMENTS AND STANDARDS.
        SECTION E  - EMISSION CHARACTERISTICS (To be completed only in connection with facilities for the control of oir pollution)
DESCRIBE THE EFFECT OF POLLUTION CONTROL FACILITY IN TERMS OF QUANTITY AND QUALITY OF EMISSION AND
OF \YASTES OR BY-PRODUCTS REMOVED, ALTERED OR DISPOSED OF.  IF FEASIBLE,  ATTACH PROCESS FLOW OR
SCHEMATIC' DIAGRAM \UTH MATERIAL BALANCES OF POLLUTANTS IN THE EMISSION  STREAM. REPORT EITHER ON
ACTUAL BASIS, OR, IF FACILITY IS NOT YET IN OPERATION, ON DESIGN BASIS.
 I. HOURS PLANT OR PROPERTY IS IN OPEP.ATION:
                                                        a.  Per Month:  Mm.

                                                        b.  Per Yea-:   Mm.
                                                                                       T.Iax.

                                                                                       Max.
Avp.

A vg.
2. POLLUTANTS  TO
   B C CONTROLLED
   (Specify OOC.V
3 .  VOLUMETrilC r L O W
   P A T E O P E: v: .-
   SION  (acfu^l tu6:c
                             WITHOUT POLLUTION CONTROL FACILITY
                                                                                    WITH POLLUTION CONTROL  FACILITY
                            Mm.
                                                   Avf.
                        b.  Mm. .
A. CONG F-M TF' ^ MOM
   (in : o/(.'n:e "' '.,•
                         d.  Mi,
                                                                       -°r
                                                   Av«. .
                                                   AvS.
                            Win.
                                                                                Win.
                                                                                          . Max.  	 Avg.
                                                                                Mm. 	 M.ix.
                                                                                Mm. .
                                                                                                                         	"F
                                                                                Min.
                                                                                           Max.
                                                                                Mm. .
EPA Forti 3300-1 (?-71) (Page 4)
                                                            ORIGINAL

                                                              A  A

-------
                                                                                                                     FORM APPROVED

                                                                                                                    OMB NO. 153-ROOI3
 7. DESCRIBE METHODS OF DETERMINING RATES, CONCENTRATION AND CHARACTERISTICS OF EMISSIONS.
 8. IDENTIFY APPLICABLE STATE AND LOCAL AIR POLLUTION CONTROL REQUIREMENTS AND STANDARDS.
                                SECTION F - COST INFORMATION (See Note to instructions for this section)
1. IS THERE  ANY BY-PRODUCT OR MATERIAL WHICH, WITHOUT T
  RECOVERED THROUGH THE USE-OF THE FACILITY? [J YES
                                                                     CONTROL FACILITY, WOULD BE LOST AND WHICH IS
                                                                     NO
   A.  IF YETS.  IDENTIFY

   B. INDICATE  THE DISPOSITION OF EACH TYPE O F RECOVERED M AT ERl AL. INCLUDING IF APPLICABLE, THE SALE OR
      SIMILAR DISPOSITION OF RECLAIMED OR RECOVERED MATERIAL TO INDUSTRIAL WASTE RECOVERY  FIRMS OR OTHERS.
2. ANNUAL COST

   RE CO Vcl RY
                    A.  MATERIAL RECOVERED AND SOLD
                    B. OTHER
                    C.  TOTAL
3. TOTAL  AVERAGE ANNUAL MAINTENANCE AN D OPERATIN G COSTS
   (7Vo( applicable it no coat recovery is reported in Item 2}
EPA Form 3300-1 (9-71) (Page 5)
                                                              ORIGINAL

                                                                A-5

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                                                                                                              FORM A°PROVED
                                                                                                              OMB NO. 158-R0013
ENVIRONMENTAL PROTECTION AGENCY
NOTICE OF STATE CERTIFICATION
(Pursuant to Section 169 of tha Internal Revenue
Code of 1954, as amended)
STATE
WATER OR AIR POLLUTION CONTROL AGENCY OR
AUTHORITY
It is hereby certified that the control facility described in the attached application is in conformity with State and local programs and
requirements for the control of D \vater pollution CD air pollution, as required by section 169 of the Internal Revenue Code of 1954, as
amended, and regulations issued thereunder. According to the applicant, this control facility 1 1 was placed 1 	 1 will be placed in operation on
, 19
In the case of control facility not yet in operation, this notice is certification only that the control facility, if constructed and operated
in accordance with the application, will be in conformity with State and local programs or requirements for abatement or control of water or
air pollution.
1. NAME OF APPLICANT 2
ADDRESS (Street, City, State, Zip Code)

3. DESCRIPTION Or CONTROL, FACILITY
4. LOCATION OF CONTROL FACILITY (Street, City, State, Zip Code) 5.
PERSON AUTHORIZED TO RECEIVE CERTIFICATION
TITLE
ADDRESS (Street, City, State, Zip Code)

RECEIVING BODY OR STREAM OF V/ATER, IF ANY
6. USE OF THE CONTROL FACILITY CERTIFIED HEREBY IS IN CONFORMITY WITH THE FOLLOWING APPLICABLE STATE PLAN OR
REQUIREMENTS FOR THE CONTROL OF l~l WATER POLLUTION l~l AIR POLLUTION.
ISSUED S
THIS DAY OF 19

STATE CERTIFICATION NUMBER T
GNED (Ofjicial of State Agency)
TLE
EPA Form 3300-2 (9-71)
                                                              A-6

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                                                                                                           FORM APPROVED
                                                                                                           OMB NO. 158-R0013
                                           ENVIRONMENTAL PROTECTION AGENCY
                                            NOTICE OF FEDERAL CERTIFICATION
                               (Pursuant to Section 169 of the Internal Revenue Coda of 1954, as amended)
   MXASF, TAKE NOTICE that pursuant to section 169 of the Internal Revenue Code of 1954, as amended, and Part 602 of Title 18 of the
   Cod3 ot" Federal Regulations, the control facility identified herein
                    tH Is certified                             O Will, if constructed, reconstructed, acquired, erected, installed
                                                                  and operated in accordance with the accompanying application,
                                                                  be certified

   as being in compliance with the applicable regulations of Federal agencies and the general policies of the United States for cooperation with
   the States in the prevention and abatement of Q water pollution [_)  air pollution under the Federal Water Pollution Control Act, as
   amended (33 U.S.C. 1151 et scq.) or the Clean Air Act, as amended (42 U.S.C. 1857 ei seq.). This certification is based on facts furnished
   by the applicant, and  is valid for purposes of section 169 only to the extent that such facts are complete and accurate.
1. NAME OF APPLICANT
2. EMPLOYER IDENTIFICATION NUMBER
                                                               ADDRESS (Street, City, State, Zip Code)
3. PERSON AUTHORIZED TO RECEIVE CERTIFICATION:
NAME
TITLE
                                                               ADDRESS (Street, City, State, Zip Cods)
4. DESCRIPTION OF CONTROL FACILITY
5. LOCATION OF CONTROL FACILITY (Street, Q!y, State, Zip Code)
6. EFFLUENT DISCHARGED TO
7. THE CONTROL FACILITY IDENTIFIED HEREIN Q DOES Q DOES NOT GENERATE PROFITS THROUGH THE RECOVERY AND SALES
  OF WASTES, OR OTHERWISE.
8. THE CONTROL FACILITY IDENTIFIED HEREINLU IS LJ IS NOT A BUILDING THE ONLY FUNCTION OF WHICH IS THE ABATEMENT OR
  CONTROL OF POLLUTION, AS DETERMINED IN ACCORDANCE WITH SECTION 1.169-2 (2) (I) OF THE INCOME TAX REGULATIONS.
   [~] A. THE CONTROL FACILITY IDENTIFIED HEREIN IS USED ONLY IN CONNECTION WITH PLANTS OR PROPERTIES THAT WERE IN
        SERVICE: ON OR BEFORE DECEMBER 31,1968.
   D B.	.% OF THE AMORTIZAOLE BASIS OF THE FACILITY IS ALLOCADLETO ITS USE IN CONNECTION WITH PLANTS OR PROP-
        EL' I 1^3 THAT WERE IN SERVICfc. ON OR BEFORE DECEMBER 31, 1968.
      A. THE CONTROL FACILITY PERFORMS NO FUNCTION IN ADDITION TO THE ABATEMENT OR CONTROL OF POLLUTION.

      B.	«,, OF THE AMORTIZADLE BASIS OF THE CONTROL FACILITY IS ALLOCABLE TO THE ABATEMENT OR CONTROL OF
 SGUuD

   THIS	

 •f ATtfcLi;.
                                                               SIGNATURE
DAY OF
                   .)N NUMBER
EPA Foi'm 3';.'j- i p-/
                                                            A-7

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APPENDIX B
   TUESDAY, FEBRUARY 8, 1977
         PART II
  ENVIRONMENTAL
     PROTECTION
       AGENCY
    Federal Water Pollution
         Control
     SMALL BUSINESS
    CONCERNS; FINAL
      RULEMAKING

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8082
      RULES  AND  REGULATIONS
   Title 40—Protection of Environment

     CHAPTER  I—ENVIRONMENTAL
         PROTECTION AGENCY
        SU3CHAPTEF* A—GENERAL
              IFRL 599-1]

      PART 21—SMALL, BUSINESS

           Final Rulemaking

  Notice is hereby given that the Envi-
ronmental Protection Agency intends to
amend  and make final Subchapter A,
Chapter I, Title 40, CFR Part 21, to im-
plement section 8 of  the Federal Water
Pollution  Control  Act  Amendments of
1972 (Pub. L. 92-500). This part was pub-
lished in interim final form on August 16,
1974, 39 PR page 2D692. The Small Busi-
ness Administration under 15 TJ.S.C. 636,
is  authorized  to make loans  to  assist
small business  concerns in adding to or
altering their  equipment,,, facilities, or
methods of operation to meet Federal or
State water  pollution  control require-
ments  established  under;, the  Federal
Water Pollution Control Act. A prerequi-
site to receiving such a loan Is a written
statement issued by the Environmental
Protection Agency or (if appropriate)  a
State, certifying that the additions, al-
terations,  or  methods of operation are
"necessary and adequate1.' to comply with
pollution  control  requirements  estab-
lished pursuant to the AetyThese regula-
tions describe the uniform rules for issu-
ing such statements.
  Small business concerns may be eligible
for an SBA loan if the additions, altera-
tions, or methods of  operation necessary
for pollution control result  from their
engaging in one or more of the following
activities:
  1. The business has  a discharge requiring
permitting  under '.ecclon 402 of the Act.
  2. Thf buv.nes"; discharges Into a publicly
owned treatment works which  requires  pre-
treatrnent by the business.
  3. The bus-ness plans to discharge Into a
municipal  sewer system through, the con-
struction of a later.il or interceptor sewer,
  4. The business is subject to the require-
ments of a Stafe or areawide authority tor
controlling the disposal at pollutants that
may affect groundwater.
  5. The business requires a Corp of Engi-
neers permit for dredged or fill material.
  6. The business is subject to Coast Guard
or State requ.rements regarding the stand-
ard of performance of marine sanitation de-
vices controlling  sewage from vessels.
  7. The business is Implementing a plan to
control or  pr.n'ent the  discharge or .spill of
oil or  other hazardous substances.

  Additionally an applicant for a certifi-
cation statement must meet eligibility
standards set forth by  the  Small Busi-
ness Administration. SBA small business
size standards are set out in the FEDERAL
REGISTER,  Volume 40, No. 13, January 20,
1915,  title 13, Chapter I, part 123. These
standards will be amended as appropri-
ate from time to time.         ^
  EPA's role  under these regulations is
to determine the necessity and adequacy
of the proposed additions or alterations
of equipment,  facilities, or  methods of
operation in meeting water pollution con-
trol requirements. To receive the requi-
site statement  from  EPA, or the  State
agency which hr\s assumed the program,
 an applying small business must demon-
 strate  that its activities or discharges
 will meet the applicable requirements of
 the Federal Water Pollution Control Act
 for the particular discharge for which
 certification is being requested.
   An applicant must show that the addi-
 tions, alterations, or methods of opera-
 tion for which it  is applying for  SBA
 financing  are necessary  and adequate
 for compliance with all  of the require-
 ments of one or more of  such applicable
 requirements or is in pursuance of a
 known requirement of  the Federal  Wa-
 ter Pollution Control Act of  1972.
   EPA, at the time of certification,  may1
 advise SBA, as well as  the applicant, of
 compliance  steps required to meet any-
 other requirements within the specified;
 category of eligibility for which an SBA,
 loan is being applied.
   EPA will not determine the cost-effect
 tiveness of the proposed additions or al-!
 terations nor will  it assess  whether  or
 not other more  efficient or  technically!
 superior alternatives  exist.  However/,
 EPA will attempt to identify those com- -
 ponents of  the proposed additions,. al-i
 terations, or methods of operation whictu '
• appear to be extraneous to the achieve-
 ment of the degree of pollution  abate-
 ment required by an applicable standard,
   EPA will not issue statements to ap-
 plicants for loans to be  applied solely
 to the  preparation or undertaking  of
 plans to determine the feasibility of or
 the design for the  anticipated construc-
 tion. However, this provision does  not
 later preclude SBA financial assistance
 being utilized for design, plans, and spec-
 ification work which are a  part of  the
 additions, alterations, or  methods of op-
 eration deemed necessary and adequate
 by EPA. This exclusion results from the
 very nature of the  activity conducted, in
 that no determination can  be made of
 the adequacy or  necessity  of designs,
 plans,-, or specifications until they have
 been finished.  EPA will also  not  certify
 any addition,  alteration, or  method  or
 operation for which an SBA  loan is not
 intended to be sought.
   The review by EPA will be a technical
 review, with review of the applicant's el-
 igibility as  a small business  and for the
 amount of financial assistance requested
 to be conducted by SBA. As noted  in
 § 21 13 of  these regulations, the certifi-
 cation by EPA or a State for SBA Loan
 purposes in no way constitutes a determi-
 nation by EPA or the State that the fa-
 cilities certified (1) will  be  constructed
 within the time specified by  an applica-
 ble standard or  (2) will  be  constructed
 and  installed  in accordance with the
 plans and specifications submitted in the
 application,  will  be operated and main-
 tained properly, or will be  applied  to
 process  wastes which  are the same  as
 described in the application.  The certifi-
 cation in no way constitutes  a waiver by
 EPA or a State of its authority  to  take
 appropriate  enforcement action  against
 the owner or operator  of such facilities
 for violations of an applicable standard.
   The application for EPA-issued state-
 ments will not generally be subject  to
 public  notice  or  hearings but  will  be
 available for  public  inspection  during
 the period of review by the Regional Ad-
 ministrator or during the period of ap-
 peal. However, information  adequately
 identified to the  Regional Administra-
 tor as being entitled to protection as a
 trade secret shall be treated confiden-
 tially by the Agency. The Regional Ad-
 ministrator shall, when necessary, pro-
 vide public notice and conduct a public
 hearing regarding a specific application
 if he believes that the proposed addition,
 alteration, or method of operation may
 adversely aSect an interest of the nubile.
   Applicants are reminded that the pen-
 alties provided under 18 U.S.C. 1001 and
 18 U.S.C.  286 can be applied against in-
 dividuals  who  modify, change, or alter
 any statements as issuedr or who submit
 an application  containing false informa-
 tion.
   Section 7  or the  Small Business Act
 makes no attempt to apportion responsi-
 bilities  between the  States  and  EPA.
 However,  provision  is made for States,
 upon application to EPA and approval by
 EPA,  to conduct a program for issuing
 statements under these regulations. Since
 many applications for additions, altera-
 tions, or methods of operation are de-
 signed to meet requirements issued and
 enforced by the States pursuant to pro-
 grams under various sections of the Act,
 States are encouraged to accept the  re-
 sponsibilities  for conducting  such  a
 program, and may use funds authorized
 under section  106 of  the Act for this
 purpose.
   Applicants will also be subject to sep-
 arate regulations promulgated by the
 Small Business Administration with re-
 gard to their type of business and finan-
 cial eligibility and which establish pro-
 cedures concerning applications to SBA
 for loan assistance.
   This regulation does not apply to re-
 quests for loans to assist small businesses
 in meeting  a  compliance  requirement
 under the Clean Air Act as authoxizedJiy,
 the Small Business Act, section^TO)) (5)y
 A separate program and procedures-ate
 established in Title  13—Business  Credit
 and Assistance, Chapter I—Small  Busi-
ness Administration, Part 123—Disaster
 Loans, in Volume 40, No. 13 of the FED-
 ERAL REGISTER,  page 3210D, January 20,
 1975, for these loans. The Small Business
 Administration will coordinate directly
 with the  individual State air pollution
 control agencies in this regard.
   In a proposed form, these regulations
were reviewed  by other Federal  agen-
 cies and States. Comments were received
 from the Departments of Commerce and
Interior, the Small Business Administra-
 tion, and the State of Pennsylvania.
   Comments were solicited from the Re-
 gions who have had nearly two years ex-
 perience in the program, as well as from
 the SBA, the general public, and profes-
 sional and trade associations. The final
 regulations  reflect those responses.
   These final regulations will become ef-
 fective March 10,1977.

  Dated: January 27, 1977.

                    JOHN QBARLES,
                Acting Administrator.
                               FEDERAL REGISTER, VOL. 42,  NO.  26—TUESDAY, FEBRUARY 8, 1977
                                                  B-2

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                                               RULES AND REGULATIONS
                                                                            8083
Sec.
21.1   Scope.
21.2   Definitions.
213   Submission of applications.
21.4   Review of applications.
21.5   Issuance ot statements.
21.6   Exclusions.
21 7   [Reserved].
21.8   Resubnussion of application.
219   Appeals.
21.10  Utilization of the statement.
21.11  Public participation.
2112  State issued statements.
21.13  Effect of certification upon authority
        to enforce applicable standards.
  AUTHORITY:  (15 U.S.C.  R381. as amended
by Pub.  L. 92-500.

§ 21.1  Scope.
  This' part  establishes procedures  for
the issuance by EPA  of -the statements,
referred to in section T(g; of the Small
Business Act and sectfoTTS of the Federal
Water  Pollution- Control  Act Amend-
ments of 1972, to the effect that additions
to or alterations in the equipment,  fa-
cilities  (including  the  construction of-
pretreatment facilities  and  interceptor
sewers),  or  methods of  operations of
small business  concerns  are necessary
and  adequate to comply with require-
ments  established  under  the  Federal
Water Pollution Control Act, 33  U.S.C.
1151, etseq.
§ 21.2  Definitions.
  (a) "Small business concern" means a
concern defined by section 2 [3] of the
Small  Business  Act,  15 U.S.C. 632, 13
CFR Part 121,  and regulations  of the
Small Business  Administration promul-
gated thereunder.
  (b> For purposes of paragraph 7'g) (2)
of the  Small Business  Act, "necessary
and adequate" refers to additions, alter-
ations,  or methods  of operation in the
absence of which a small business con-
cern could not comply with one or more
applicable standards. This can be  deter-
mined with referenc to  design specifica-
tions  provided  by manufacturers, sup-
pliers,  or consulting engineers; includ-
ing, without limitation,  additions, alter-
ations,  or methods of operation the de-
sign specifications of which will provide
a measure of  treatment or abatement of
pollution  in  excess  of that required by
the applicable standard.
  (c) "Applicable Standard" means any
requirement,  not subject to  an excep-
tion  under § 21.6, relating to the  qual-
ity of water containing  or potentially
containing pollutants,  if  such require-
ment is imposed by:
  <1> The Act;
  (2)   EPA  regulations  promulgated
thereunder or permits issued by EPA or
a State thereunder;
  (3) P^egulations by  any other Federal
Agency promulgated  thereunder;
  (4) Any State standard or require-
ment as applicable  under section  510 of
the Act;
  (3) Any  requirements  necessary to
comply  with  an areawide  management
plan approved  pursuant to section 208
(b) of the Act;
  <6) Any  requirements  necessary to
comply  with a  facilities plan developed
under section 201 of the Act (see 35 CFR,
Subpart E);
   (7) Any  State  regulations  or  laws
controlling the disposal of aqueous pol-
lutants that may affect groundwater.
   (d)  "Regional  Administrator" means
the Regional Administrator of  EPA for
the Region including the State in which
the facility  or method of operation  is
located, or his designee.
   (e) "Act" means the Federal Water
Pollution Control Act, 33  U.S.C. 1151, et
seq.
   (f) "Pollutant"  means  dredged spoil,
solid  waste,  incinerator  residue,  sew-
age, garbage, sewage  sludge,  munitions,
chemical  wastes,  biological  materials,
radioactive materials,  heat, wrecked  or
discarded  equipment, rock, sand, cellar
dirt and industrial, municipal, and agri-
cultural waste discharged  into water.
For the purposes of  this section,  the
term also means sewage from vessels
within the meaning of section 312 of the
Act.
   (g) "Permit" means any permit issued
by either EPA or a State  under the au-
thority  of  section 402 of the Act; or by
the  Corps  of  Engineers  under section
404 of  the Act.
   (h)  "State" means a State,  the Dis-
trict  of Columbia, the Commonwealth-
of  Puerto  Rico,  the  Virgin  Islands,
Guam,  American Samoa,  and the Trust
Territory of the Pacific Islands.
  Comment: As the SB A does not extend Its
program  to the  Canal Zone, the listing  of
the Canal Zone as a State for the purposes
of meeting a requirement imposed by  sec-
tions 311 or 312 of the Act Is not effective in
this regulation.
   (i)  "Statement" means a written ap-
proval  by  EPA,  or  if appropriate,  a
State, of the application.
   (j)   "Facility"  means  any building,
structure,  installation  or  vessel, or por-
tion thereof.
   (k> "Construction" means the erection,
building, acquisition, alteration, remodel-
ing, modification,  improvement, or ex-
tension of any facility; Provided, That
it does  not mean preparation or under-
taking of: Plans to determine feasibility;
engineering, architectural, legal,  fiscal,
or  economic  investigations or  studies;
surveys, design, plans, writings,  draw-
ings,  specifications or producedures.
                                      Comment: This provision would not later
                                    preclude  SBA  financial  assistance  being
                                    utilized  for any planning or design effort
                                    conducted previous to construction.

                                      (I)  The term "additions and altera-
                                    tions" means the act of undertaking con-
                                    struction of any facility.
                                      (m) The term "methods  of operation"
                                    means the installation, emplacement, or
                                    introduction of materials, including those
                                    involved in construction,  to  achieve  a
                                    process or procedure to control: Surface
                                    water pollution from non-point sources—
                                    that  is, agricultural,  forest   practices,
                                    mining, construction; ground  or surface
                                    water pollution from well, subsurface, or
                                    surface  disposal  operations;   activities
                                    resulting in  salt  water  intrusion;  or
                                    changes in  the movement, flow, or cir-
                                    culation of navigable waters or ground-
                                    waters.
                                      (n)  The  ternv"vessel"  means  every
                                    description of watercraft or other artifi-
                                    cial contrivance used, or capable of being
                                    used,  as a means  of transportation on
                                    the navigable waters of the United States,
                                    other than  a vessel  owned or operated
                                    by the  United  States  or a State or  a
                                    political subdivision thereof, or a foreign
                                    nation; and is used for commercial pur-
                                    poses by a small business concern.
                                      (o)  "EPA"  means the Environmental
                                    Protection Agency.
                                      (p) "SBA"  means  the Small Business
                                    Administration.
                                      (q)  "Areawide agency" means an area-
                                    wide  management  agency  designated
                                    under section 208(c) (1) of the Act.
                                      (r)  "Lateral  sewer"  means  a  sewer
                                    which connects the collector sewer to the
                                    interceptor sewer.
                                      tsi  "Interceptor sewer" means a sewer
                                    whose primary purpose is to  transport
                                    wastewaters from  collector sewers  to  a
                                    treatment facility.

                                    § 21.3  Submission of applications.
                                      (a)  Applications for the statement de-
                                    scribed  in § 21.5  of  this  part  shall be
                                    made to the EPA Regional  Office for the
                                    Region covering tthe State in  which the
                                    additions,  alterations,  or  methods  of
                                    operation covered by the application are
                                    located. A listing of EPA Regional Of-
                                    fices,  with their mailing addresses, and
                                    setting  forth  the States  within  each
                                    Region is as follows:
Region
                       Address
I

II

III

IV


V

VI


VII

VIII

IX
Regional Administrator, region I, EPA, John V. Kennedy
  Federal Bldz., room 230.1, Boston. Mass. (K2l'3.
Regional Administrator, rea-on If. EPA, 26 Federal Plaza,
  room M'8. New York, N.Y. t'Wr?
Regional AdTmnistmtor, region III. El'A.. Curtis Bid? ,
  6th and WalnutSts., Philadelphia, Pa 19106
Regional Administrator, region IV, EPA, ?Ao CourtUnd
  bt. NE . Atlanta, Ga. 30308.

Regional Administrator, region V. TPA, 230 South Dear-
  born St , Chicago. III. e»604
Regional Administrator, region \ T, KPA. 1J01 Elm St.,
  27th  floor, Iirst International  l!ld«., 71) Dallas, Tex.
  75201
Ke?iorrtl Administrator, region VII, F. PA, 1735 Baltimore
  Ave.. Ka.-.vis City, Mo. 641C8.
Rrcionul \diuiristralor, reckon VTII,  EPA, 1350 Lincoln
  M . sui'e '«X>. Denver, Colo SO-'in.
RcBiunri) AdTi ilalritor, i"ch 'JS1U1.
Conneticut,  Maine,  Massachusetts,  N'aw
  Hampshire, Rhode Island, and Vermont.
Ke.v Jersey, New Yorfc, \ir£in Islands, and
  Puerto Rico.
IV! iware. District of Columbia, TVnns> Ivama,
  Mari 1'tnd, \ iryima, and Wos> \ :r£im,i.
AIal>aina. Florida. Georgia, Kentucky, Mis-
  S'.vippi, North Carolina, South ( arohna, and
  I'C'P.M^SSO'-
1'hnois. Indiana, Michigan, Mii'ne:>ota, Ohio,
  and \\ :s"on.Mn
Ark xn^as  lAHnsiana, New Uex.to. Oklahoma,
  and Tex.is.

To'.va, Kansas, Missouri, and N'-brosVa.

Color ido, Montana, North I) ikota, ?outh
  Dako'a. I't.vii. .tnd Wyonimjr
An/mi i r ih'orni-i, IHwau, NVv.ula. Guam,
  A.:i"ii. in Xi'noa 'uid Trust T. rntory of the
  1'iM'i" 1 Iird-s
Al i-^k \ Id iho, Ort^on. and W.uslirn^ton.
                                FEDERAL REGISTER, VOL  42, NO. 26—TUESDAY,  FEBRUARY  8, 1977
                                                        B-3

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8084
      RULES  AND  REGULATIONS
  (b) An application described In para-
graph (1) of § 21.3(c) may be submitted
directly to the appropriate State, where
a State has assumed responsibility for is-
suing the statement. Information on
whether EPA has retained responsibility
for certification ov whether it has  been
assumed by the State may be  obtained
from either the appropriate Regional
Administrator or the State Water Pollu-
tion Control Authority in which the fa-
cility is located.
  (c) An application need be in no par-
ticular  form,  however,  it must be in
writing and must include the following:
  (1) Name of  applicant  (including
business name, if  different* and mail-
ing address. Address of the affected fa-
cility or operation, if different,  should
also be Included.
  (2) Signature of the owner, partner,
or principal executive officer reouesting
the statement.
  ' (3) The Standard Industrial  Classi-
fication number for  the^ business for
which an application is being submitted.
Such SIC number shall be-obtained from
the  Standard  Industrial "Classification
Manual, 1972 edition. If, the applicant
does not know the SIC for the business, a
brief description of the type of business
activity being conducted should be pro-
vided.
  (4) A description  of  the process or
activity generating the  pollution to be
abated  by the additions, alterations, or
methods of operation covered by the ap-
plication, accompanied by a schematic
diagram  of the major  equipment  and
process, where practicable.
  (5) A specific description of the addi-
tions, alterations,  or methods of opera-
tion covered by the application. Where
appropriate, such  description  will in-
clude'a summary  of  the facility  con-
struction  to fcs undertaken;  a listing of
the major equipment to be purchased or
utilized in the operation of the facility;
the purchase of any  land or easements
necessary to the  operation  of  the fa-
cility; and any other items that the ap-
plicant  deems pertinent. Any informa-
tion that the applicant  considers to be
a trade secret shall be identified as such.
  (6) A declaration of the requirement,
or  requirements,  for  compliance  with
which   the alterations,  additions,  or
methods of operation are claimed to be
necessary and adequate.
  (i) If the requirement results from a
permit issued by EPA or a State under
section  402 of the  Act, the permit num-
ber shall  be included.
  (ii) If the requirement results  from a
permit  issued by EPA or a State for a
publicly  owned treatment  works,  the
municipal permit  number shall  be in-
cluded alonjj witii a written declaration
from the authorized agent for  the  pub-
licly owned treatment works  that re-
ceived the permit detailing the specific
pretreatment requirements being placed
upon the  applicant.
  (iii)  If  the requirement initiates  from
a plan to include the applicant's  effluent
in an  existing municipal sewer  system
through the construction of lateral or in-
terceptor  sewers, a  written  declaration
from the authorized agent from the pub-
licly owned treatment works shall be in-
cluded noting that the sewer construc-
tion is consistent with the integrity of
the system; will not result in the capacity
of the publicly owned treatment works
being exceeded; and where applicable, is
consistent with a facilities plan developed
under section 201 of the Act (see 35 CFR
Part 907).
  (iv) If the requirement results from a
State order, regulation, or other enforce-
able authority controlling pollution from
a vessel as provided by section 312(f) (3)
of the Act,  a written declaration from
the authorized agent of the State speci-
fying the control measures being required
of the applicant shall be included.
  (v)  If the requirement is a result of
a permit issued by the Corps of Engineers
related to permits for dredged or fill ma-
terial as provided by section 404 of the
Act, a copy of the permit as issued shall
be included,  i
  (vi)  If  the requirement results from
a standard  of performance  for control
of sewage, from vessels as promulgated
by the Co&st Guard under section 312(b)
of the Act, the vessel registration  num-
ber or documentation number shall be
included.
  (vii) -If the requirement results from
a plan  to'control  or prevent the dis-
charge or spfll of pollutants as identified
in section 311 of the Act, the title and
date of that plan shall be included. •
  (viii> If the requirement is the  result1.
of an order by a State or an areawide-
management agency controlling the dis-
posal, of aqueous pollutants so as to pro-
tect groundwater, a copy of the order as
issued shall be included.
  (7)  Additionally, if  the applicant has
received  from a  State Water Pollution
Control Agency a permit issued by the
State within  the preceding two years,
and if such permit was not issued under
the authorities of section 402 of  the Act,
and where the permit  directly relates to
abatement of the discharge for which a
statement is sought, a copy of that per-
mit shall also be included.
  Comment: Some States under State permit
programs,  separate and distinct from toe
KPDES permit program under the Act, con-
duct an engineering review of the  facilities
or equipment that would be used to control
pollution. The results of sv.ch a review would
be materially helpful In determining the ne-
cessity and adequacy  of any alterations or
additions.

  (8)  Any written information from  a
manufacturer, supplier or consulting en-
gineer,  or similar  independent source,
concerning the design  capabilities of the
additions or alterations covered by the
application,  including  any  warranties,
warranty limitations or certifications ob-
tained from or provided by such sources
which would bear upon these design and
performance capabilities. The Regional
Administrator may  waive the require-
ment  for this paragraph  if it  appears
that there is no independent source for
the information described herein; as, for
example,  when  the applicant has  de-
signed and constructed the additions or
alterations with in-house capability.
  (9) An estimated  schedule  for  the
construction or implementation of the
alterations, additions, or methods of op-
eration.
  (10) An estimated cost of the altera-
tions, additions, or methods of operation,
and  where  practicable, the  individual
costs of major- elements of the construc-
tion  to  be undertaken.
  (11) Information  on previously  re-
ceived loan assistance under this section
for the  facility or method of operation,
including a description and dates of the
activity funded.
  (d) A separate application must be
submitted for every addition,  alteration,
or method of operation that is at a sepa-
rate  geographical location from the ini-
tial application.
  Comment:  As an example, a chain naa
four  dry cleaning establishments  scattered
through a community. A separate application
would have to be filed for each.

  (e) No statement shall be approved
for any  application that has not included
the information or declaration  require-
ments imposed by paragraph (c) (6) nr
§ 21.3.
  (f ) All applications  are to be submit-
ted in duplicate.
  (g) All applications are subject to the
provisions of  18 U.S.C. 1001 regarding
prosecution  for  the  making of  false
statements or. Ihe.concealing of material
  (h) Instructional  guidelines to assist
in the submission of applications for EPA
certification are  available from EPA or
a certifying State.
§ 21.4  Review of applications*.
  'a) The Regional Administrator or
his  designse will conduct a review of the
application. This review will consist of a
general assessment  of  the adequacy of
the  proposed alterations, additions, or
methods of operation.  The review will
corroborate that the proposed  altera-
tions, additions, or methods of operation
are required  by an applicable standard.
The review will  identify  any proposed
alterations, additions, or methods of op-
eration  that  are not  required  by an
applicable  standard, or that are extran-
eous to the achievement of an applicable
standard.
  (b) The assessment  of  adequacy will
be conducted to ensure that the proposed
additions,  alterations,  or  methods of
operation are sufficient to meet one or
more applicable standards whether alone
or in conjunction with  other plans. The
assessment will  not generally  examine
whether other alternatives exist or which
would be more meritorious from a cost-
effective,   efficiency,  or  technological
standpoint.
  (c) An  application  which proposes
additions,  alterations,  or  methods of
oneration  whose design, in anticipation
of a  future requirement, will achieve a
level of performance above the require-
ments imposed by a presently applicable
standard shall be reviewed and approved
by EPA or  a State \\ ithout prejudice. The
amount of financial  assistance  for  such
an  application  will  be determined by
SBA.
                               FEDERAL REGISTER, VOL 42, NO. 26—TUESDAY, FEBRUARY 8, 1977
                                                  B-4

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                                              RULES AND  REGULATIONS
                                                                          8085
   (d)  The Regional Administrator shall
 retain one copy of the application and a
 summary of the action- taken on it. Upon
 completion of his review, the Regional
 Administrator shall return  the original
 application along with  any other sup-
 porting  documents or information pro-
 vided to the applicant along with a copy
 to the appropriate SBA district office for
 processing.

 § 21.5   Issuance of statements.
   (a)  Upon application  by a small busi-
 ness  concern pursuant to  § 21.3  the
 Regional Administrator  will, if he .finds
 that the additions, alterations, or meth-
 ods of operation covered by  the applica-
 tion are adsquate and necessary to com-
 ply with an applicable standard, issue a
 written  statement to the  applicant  to
 that effect, within 45 working days fol-
 lowing receipt of f.he application, or with-
 in 45 working days following receipt of
 all information required to be submitted
 pursuant to $ 21.3(c), whichever is later.
 Such  a  written  statement  shall   be
 classified as a full approval.  If an appli-
 cation is deficient In  any respect, with
 regard to the specifications  for submis-
 sion listed in  § 21.3(c), the Regional Ad-
 ministrator shall  promptly, but  in no
 event later than 30 working days follow-
 ing receipt of the application, notify the
 applicant of such deficiency.
   (b) (1) if an application contains pro-
 posed alterations, additions,  or methods
 of operation that are adequate and nec-
 essary  to  comply with  an  applicable
 standard but  also contains proposed  al-
 terations, additions, or methods of opera-
 tion that are not necessary to comply
 with  an  applicable standard, the Re-
 gional Administrator shall conditionally
 approve  the application  within the time
 limit  specified in  paragraph (a)  of this
 section, and shall also identify in the ap-
 proval those  alterations,  additions,  or
 methods of operation that he determines
 are not necessary.
   (2)  Conditional  approvals  as  con-
 tained in  a statement will  satisfy the
 requirements  for  approval by EPA for
 those alterations,  additions,  or methods
 of operation determined to be necessary
 and adequate. Such conditional approv-
 als may be submitted to SBA in satis-
 faction of the requirements of section
 7(g) '2) (3)  of the Small Business Act.
   (3) Conditional approvals will not sat-
 isfy  the requirements for approval  by
 EPA for those alterations, additions, or
 methods of operation included  in  the
 application that are determined not to
 be necessary.  Unnecessary  alterations,
 additions, or  methods of operation are
 those  which  are extraneous  to  the
 achievement of  an applicable standard.
   (4)  Conditional approvals may be ap-
pealed to the  Deputy Administrator  by
an applicant  in  accordance with  the
procedures identified in § 21.8.
   (c)  If the Regional Administrator de-
termines that  the additions,  alterations,
or methods of operation covered by an
application are not necessary and  ade-
quate  to comply  with  an  applicable
standard, he shall disapprove the appli-
cation and shall so advise the applicant
 of such deterhiination within the time
 limit specified in paragraph (a) of this
 section, and shall state  in  writing the
 reasons for his determination.
   (d)  Any application shall be  disap-
 proved if the Regional Administrator de-
 termines that  the proposed addition, al-
 teration, or method of operation would
 result in the violation of any other re-
 quirement of this Act, or of any' other
 Federal or State law or regulation with
 respect to the protection of the environ-
 ment.
   ( e )  An_ application  need not demon -
 strate  ffiat" ~~~                  ~
 "operatloT""
                             ^
 The applicant need  only  cSemonstratS
 that the additions, alterations, or meth-
 ods of operation will assist in ensuring
 compliance with one or more- of the ap-
 plicable standards for which financial
 assistance is being requested.
  Comment: As an example,  a small busi-
 ness has two discharge pipes — one for proc-
 ess water, the other for cooling water. The
 application for loan assistance is to  control
 pollution from the process  water discharge.
 However, EPA or  a  State  may review the
 applicant's situation and Identify for SBA
 that the applicant Is  subject to other re-
 quirements for which the applicant has not
 sought assistance

  (f) An application should not include
 major alternative  designs  significantly
 differing in scope, concept, or capability.
 It is expected that the applicant  at the
 time of submission will have selected the
 most  appropriate or  suitable design for
 the addition, alteration,  or method of
 operation.
  fg) EPA will not provide  assistance in
 the form of engineering, design, planning
 or other technical services to any appli-
 cant in the preparation of his applica-
 tion.
  (h) An applicant may be issued a cer-
 tification  for additions,  alterations, or
 methods of operation constructed or un-
 dertaken before loan assistance was ap-
 plied  for by  the applicant. Any such
 applications would  be reviewed by SBA
 for eligibility under SBA criteria, includ-
 ing refinancing and loan exposure.
 § 21.6  Exclusions.
  (a) Statements shall not be issued for
 applications in the following areas:
  (1)  Local  requirements.  Applications
 for statements for additions, alterations,
 or methods or operation that result from
 requirements imposed by  municipalities,
 counties  or  other forms of  local  or Re-
 gional authorities and governments, ex-
 cept for areawide management agencies
 designated and  approved under section
 208 of the Act, shall not be approved;
 except for those requirements resulting
 from the application of pretreatment re-
 quirements under section 307(b)  of the
 Act; or those resulting from an approved
project  for  facilities plans, and  devel-
 oped under  section 201  of the Act, (See
 35 CFR Subpart  3) ; or under a delega-
 tion of authority under the Art.
  C2i  Cost  recovery  and  user charges..
Applications  for statements involving a
 request for financial assistance in  meet-
ing revenue and service charges imposed
 upon a small business by a municipality
 conforming  to regulations governing a
 user charge  or capital cost system under
 section  204(b) (2)  of the Act  (See 35
 CFR 925-11  and 925-12)  shall  not be
 approved.
   (3)  New facility sewer  construction.
 Applications  for statements  involving
 projects that involve the construction of
 a lateral, collection, or interceptor sewer,
 at or for a facility that was not in exist-
 ence on  October 18,  1972, shall  not be
 approved. Applications  for  additions,
 alterations, or methods  of operation for
 new facilities  that do not involve sewer
 construction are not affected by this pre-
 clusion.  Further, if an applicant is com-
 pelled to move as a result of a relocation
 requirement but operated at the  facility
 prior to October 18,1972, the cost  of con-
 struction for a lateral, collection, or in-
 terceptor sewer can be approved  for the
 new, relocated site. For the purpose of
 this exclusion lateral, collection, or  in-
 terceptoi  sewer is  determined as  any
 sewer transporting waste from a  facility
 or site to any  publicly owned sewer.
   (4) Other non-water related pollution
 abatement  additions,  alterations,  or
 methods of operation which are not  in-
 tegral to  meeting- the requirements of
 the Act,  although they may be achieving
 the requirements of another Federal or
 State law or regulation.
  Comment:  An example would  be where
 stack emission  controls were  required  on
 equipment that  operated  the  water pollu-
 tion  control facility. This emission  control
 equipment as an integral part of the water
 pollution control system would be approv-
 able. However, emission control  equipment
 for a general  purpose incinerator  that only
 incidentally burned sewage sludge would not
 be approvable. The general  purpose  incin-
 erator might also receive loan assistance but
 under separate procedures than those set out
 for water pollution control.

  (5) Privately owned treatment facility
 service  or user  costs. Applications  for
 statements involving financial assistance
 in meeting user cost or fee schedules re-
 lated to participating  in a privately
 owned treatment facility not under the
 ownership or  control of the applicant
 shall not be approved.
  (6)   Operation   and  maintenance
 charges.  Applications  for   statements
 containing a request for, financial  assist-
 ance in  meeting  the  operations and'
 maintenance costs  of  operating the  ap-
 plicant's additions, alterations, or meth-
 ods of operation shall not be approved
 for any elements relating to  such areas
 of cost.
  (7) Evidence of financial  responsibil-
 ity. Applications for statements contain-
 ing a request for financial assistance in
 meeting   any  requirements  relating  to
 evidence  of  financial responsibility  as
 provided  in  section 311 (p)  of the Act
 shall not be approved.

 §21.7   [Reserved]
  Comment- Applications for a statement re-
sulting from a requirement to control pol-
lution from non-point sources  as identified
In section 304(e) (2) (A-P) of the Act and
described  In § 21.2(m) will not presently b»
                               FEDERAL REGISTER, VOL. 42, NO. 26—TUESDAY",  FEBRUARY  8, 1977
                                                    B-5

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8086
      RULES  AND  REGULATIONS
Issued a statement under 5 21.5 unless the
requirement Is established through a permit
under Section 402. There Is  no requirement
under the current Act that the Federal gov-
ernment directly control pollution from such
sources,  and  the nature and scope of State
or area wide management agency proposals or
programs to control such sources cannot be
determined at this time. As  State and area-
wide plans for  control of nonpotnt sources
being prepared under  208 of the-Act, will not
be completed for  several years, this section
is being  reserved pending a  future determi-
nation on the eligibility ot  applications re-
lating to nonpomt sources tcf receive a state-
ment under this part.

§ 21.8  Re<\ibnii3«ion of application.

  (ai A small business- concern whose
application  is disapproved  may submit
an  amended or corrected  application to
the Regional Administrator at any time.
The applicant shall provide the date of
any previous application.

§21.9  Appeals.         :'^f ,
  (a) An applicant aggrieved by a deter-
mination  of a Regional' Administrator
under §21.5 .may appeal, la/writing to
the Deputy  Administrator of the Envi-
ronmental Protection Agency, within 30
days of the date of  th&-> determination
from which  an appeal is taken; provided
that the Deputy Administrator;may, on
good cause shown, accept- an appeal at a
later time.
  (b) The applicant in requesting such
an  appeal shall  submit  to the Deputy
Administrator a copy of the complete
application  as reviewed by the Regional
Administrator.
  (c) The applicant should also provide
Information as  to  why It  believes  the
determination  made by  the  Regional
Administrator to be in error.
  (d) The  Deputy  Administrator shall
act upon such appeal within 60- days of
receipt  of any complete application for a
review of the  determination.
  (e) Where a State has  been delegated
certification authority, the procedure for
appeals shall be established in the State
submission required in § 21.12.

§ 21.10  Utili/ation of the statement.

  (a) Statements issued by the Regional
Administrator will  be mailed to  the
small business applicant and to the dis-
trict office of the Small Business Admin-
istration  serving the geographic  area
where the business is located. It is the
responsibility  of the applicant to also
forward the statement to  SBA as part of
the application of a loan.
  (b) Any  statement or  determination
issued under § 21.5  shall not be altered,
modified,  changed,  or destroyed by any
applicant in the course of  providing such
statement to  SBA.  To do so can result
in the revocation o£ any  approval con-
tained in the  statement and subject the
applicant to the penalties  provided in 18
U.S.C. 1001.
  (c) If an application for which a state-
ment is issued under § 21.5 is substan-
tively changed in scope, concept, design,
or  capability  prior to the  approval  by
SBA of the financial assistance requested,
the statement as issued shall be revoked.
The applicant must resubmit a revised
application under § 21.3 and a new re-
view must be conducted. Failure to meet
the requirements of this subparagraph
could subject the applicant to  the pen-
alties specified in 18 U.S.C. 1001 and 18
U.S.C. 286. A substantive change is  one
which materially affects the performance
or capability of the proposed  addition,
alteration, or method of operation.
  (d) An agency, Regional Administra-
tor, or State issuing a.  statement under
§ 21.5 shall retain a complete copy of the
application for a period of five years after
the date of issuance of the statement.
The application shall be made  available
upon request for inspection or use at any
time  by any  agency  of the  Federal
Government.
  (e) No application for a statement or
for financial assistance under  this sec-
tion or statement issued under this sec-
tion shall constitute or be construed as
suspending, modifying, revising, abrogat-
ing or otherwise  changing  the require-
ments imposed on the applicank^by the
terms, conditions,  limitations or sched-
ules of compliance contained in an appli-
cable standard, permit, or other provi-
sion established or authorized under the
Act or any State or local statute, ordi-
nance or code.
  (f) No statement as issued  and re-
viewed shall be construed as a waiver to
the  applicant's  fulfilling  the  require-
ments of any State or local law, statute,
ordinance, or  code (including  building,
health, or zoning codes).
  (g) An amended application  need not
be submitted if the facility, property, or
operation for which the statement is is-
sued is sold, leased, rented, or transferred
by the applicant to another party prior
to approval  by SBA of the financial as-
sistance: Provided, That there  is or will
be no substantive change in the scope,
concept,  design, capability, or conduct of
the facility or operation.
  Comment: However, eligibility for financial
assistance would be reexamlned by SBA with
regard  to any such  sales,  lease,  rental or
transfer.

  (h) The Regional Administrator may
include in any statement a date of ex-
piration, after which date the  approval
by the Regional Administrator contained
in the statement shall  no longer apply.
The date of expiration shall not become
effective  if the applicant has submitted
the statement to the SBA, prior to the
date of expiration,  as part of the appli-
cation for financial assistance.
§ 21.11  Public participation.
  (a) Applications shall not generally be
subject to public notice, public comment,
or public hearings. Applications during
the period of review as stated  in § 21.5,
or during the period of appeal as pro-
vided in  § 21.8, shall be  available for
public inspection. Approved applications
as provided  hi § 21.10(d)  shall  be avail-
able for  public inspection  at all  times
during the five year period.
  (b) The Regional Administrator, if he
believes that the addition, alteration, or
method of operation may adversely  and
significantly  affect an interest of  the
public, shall provide for a public notice
and/or public hearing on the application.
The public, notice and/or public hearing
shall  be conducted in accordance with
the procedures  specified for a  permit
under 40 CFR 125.32 and 40 CFR 125.34
(b).
  (c)  Where  the  applicant is  able to
demonstrate  to  the satisfaction of the
Regional Administrator  that  disclosure
of certain information or parts  thereof
as provided in § 21.3(c) (5)  would result
in the divulging of methods or processes
entitled to protection as trade secrets,
the Regional Administrator shall treat
the information or the  particular part
as confidential in accordance with the
purposes of section 1905 of Title 18 of the
United States Code and not release it to
any authorized  person.  Provided, how-
ever, That if access to such information
is subsequently requested by any person,
there  will be  compliance  with  the proce-
dures specified in 40  CFR Part 2. Such
information may be  disclosed to other
officers, employees,  or  authorized repre-
sentatives of the United States concerned
with carrying out the Act or when rele-
vant in any  proceeding  under the Act.
§ 21.12  State issued statements.
  (a)  Any State after the effective date
of these regulations may submit  to the
Regional Administrator for his approval
an  application  to  conduct a program
for issuing statements under this section.
  (1)  A State submission shall  specify
the organizational,  legal, financial, and
administrative resources  and procedures
that it believes will enable it to conduct
the program.
  (2)  The State program will constitute
an equivalent effort to that required by
EPA under this section.
  (3)  The State organization responsible
for conducting -the program  should be
the State water pollution control agency,
as denned in section 502  of the Act.
  (4)   The State submission  shall pro-
pose a procedure for adjudicating appli-
cant appeals  as provided under § 21.9.
  (5)  The State submission shall identify
any existing or potential conflicts of in-
terest on the part of any personnel who
will or may review or approve applica-
tions.
  (i)  A  conflict of interest shall exist
where the reviewing official is  the spouse
of or  dependent (as defined in the Tax
Code, 26 U.S.C. 152) of an owner, part-
ner, or principal officer of the small busi-
ness or where he has or is receiving from
the small business concern applicant 10
percent of gross personal income for a
calendar year, except that it shall mean
50 percent gross personal income for a
calendar year if the recipient is over 60
years of age and is receiving such portion
pursuant to retirement, pension, or simi-
lar arrangements.
  (ii)  If the State  is unable  to provide
alternative parties to review or approve
any application subject to conflict of in-
terest, the Regional Administrator shall
review and approve the application.
  (b) The Regional Administrator, with-
in 60  days after such application, shall
approve any State program  that con-
forms to the requirements of this sec-
                               FEDERAl REGISTER, VOL 42, NO. 26—TUESDAY,  FEBRUARY 8, 1977
                                                    B-6

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                                             RULES  AND  REGULATIONS
                                                                                                                8087
tion. Any such approval shall  be after
sufficient notice has been provided to the
Regional Director of SBA.
  (o If the Regional Administrator dis-
approves the application, he shall notify
the State, in writing, of any deficiency
in its application. A State may resubmit
an  amended application  at any later
time.
  (d) Upon approval of a State submis-
sion, EPA will suspend all review of ap-
plications and issuance of statements for
small businesses in that State, pending
transferral. Provided, however, That  in
the event of a State conflict of interest
as identified in I 21.12(a) (4) supra, EPA
shall review the application and issue the
Statement.
  (e) Any applications shall, if received
by an EPA Regional Office, be forwarded
promptly to the  appropriate State for
action pursuant to section 7(g) (2) of the
Small  Business Act and  these regula-
tions. /
  (f) Cl> EPA will  generally not review
or approve individual statements issued
by a State. However, SBA, upon receipt
and review  of a  State approved state-
ment may request the  Regional Admin-
istrator of EPA to review the statement.
The Regional  Administrator, upon such
request can further approve  or  disap-
prove the State issued statement, in  ac-
cordance with  the requirements of § 21.5.
  (2) The Regional Administration will
periodically  review  State  program per-
formance. In the event of State program
deficiencies  the Regional  Administrator
will notify the State of such deficiencies.
  <3) During  that   period  that  any
State's program is classified as deficient,
statements issued by  a  State  shall  also
be sent to  the Regional  Administrator
for review. The Regional  Administrator
shall notify the State, the applicant, and
the  SBA  of any determination  subse-
quently made, in  accordance with § 21.5
of this part, on any such statement.
  (i)  If within 60 days after notice of
such deficencies  has been provided,  the
State has not taken  corrective  efforts,
and if the deficiencies significantly affect
the conduct  of the program, the Regional
Administrator, after sufficient notice has
been provided to  the  Regional Director
of, SBA, shall withdraw  the approval
of the State program.
  (U) Any State whose program is with-
drawn and whose deficiencies have been
corrected may later reapply as provided
in 5 21.12(a).
  (gi Funds appropriated under section
106 of the Act may be utilized by a State
agency authorized to receive such  funds
in conducting this program.

§ 21.13   Effect of certification  upon au-
     thority  to enforce applicable stand-
     ards.

  The certification by EPA or a State for
SBA Loan purposes in no way constitutes
a determination  by EPA or  the  State
that  the facilities  certified  (a) will  be
constructed  within the time specified  by
an  applicable standard  or  (b) will  be
constructed  and installed in accordance
with  the  plans  and specifications sub-
mitted in the application, will be oper-
ated and maintained properly, or will be
applied  to process wastes which are the
same as described in the application. The
certification  in  no way constitutes  a
waiver by EPA or a State of its authority
to take  appropriate enforcement action
against  the  owner or  operator of  such
facilities for violations of an applicable
standard.

   [FR Doc.77-3866 Piled 2-7-77;8:45 am]
                              FEDERAL  REGISTER, VOL.  42, NO. 26—TUESDAY, FEBRUARY 8,  1977


                                                       B-7

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-------
                                           APPENDIX  D
                                     SMALL BUSINESS ADMINISTRATION
                                         APPLICATION FOR  LOAN
                                         (See  Initructioni  on Page 2)
                                                       SBA LOAN NUMBER
1  APPLICANT (Show official name without abbrcviationa utllesa in abbreviation in a part ot the official name.  For proprietor or parlnerahip,  ahow name(a)
   followed br d/b/a and trade name u>ed, if any)
City
                                    County
                                                                     State
                                                                                                  ZIP Code
                                                                                                                            Tele  No
Employer's I D  Number
                                    Date of Application
                                                                     Amount of Loon Requested
                                                                                                         Maturity Requested
Type ol Business
                                                                     Date Established
Franchise    I   I Yes
                                No    If Yes, Submit Copy
     [~~1 Exi sting Bu siness
     Q New Business
Number of Employees (Including aubaid-
lanea and affiliates)
At Time of Application	
If Loan is Approved   	
2  Use ol Proceeds
   Land  Acquisition                        $ _
   New Building or plant construction        J_
   Debt Payment                           I.
_ Acquisition and/or repair of machinery and equipment    t _
_ Working Capital                                      t
_Other                                                t
  Total                                                t
a  SUMMARY OF COLLATERAL OFFERED  (Attach detailed list of collateral offered - See Hem 8(16), page 2)
                                                   -ost                        Net Book Value                         Present Li«ns Or
                                                                           (Cost Less Depreciation)                 Mortgage Balance, If Any
   Land and Buddings     	   		   	.	
   Business machinery and equipment     	,			
   Business furniture and fixtures,  .      	   		

   Inventory  .             ...   	.   	   	.	
   Other (specify)                •       		,	

4  AS ADDITIONAL  SECURITY, PAYMENT OF THE LOAN WILL BE GUARANTEED  BY
                     Nome and Address (Include ZIP Code and Social  Security Number of Guarantors)                            N et W°r'h Outside
          (Each principal must submit a signed perioanl balance sheet  BS of the same  date as the applicant's balance sheet)             Interest In
                                                                                                                           Applicont Compony
                                                                                                                     $



5  DISCLOSURE  OF SPECIAL INFORMATION REGARDING PRINCIPALS  (a) List below the names of any SBA employees or SBA adv.aory board members
   who are related by blood, marriage or adoption to, or who have any present or have had any  past,  direct or indirect, financial interest in or in association
   with, the applicant, or any of its partners,  officers, directors or principal stockholders (such interest  to include any direct or indirect financial interest in
   anv other business entity or enterprise)  (b) When the proprietor, or any partner, officer, director, or person who holds 10 percent or more of the applicant's
   stock is an investor in a licensed Small Business Investment Company, or a proposed investor in an SB/C which has filed for a license, detailed informa-
   tion shall be submitted with this application, and (c) Likewise, if any person  identified in (b)  above,  or their spouse,  is an employee of the U S  Govern-
   ment (including members of the armed forces), detailed information shall be submitted with this application   (Use separate  sheet  if necessary)
   If none, check here      f"  (a)    [^]  (b)    Q Icl
                  Name and Address (Include ZIP Code)                                          Details of Relationship or Interest




6  MANAGEMENT 11) Names of all owners, officers, directors or partners and theirannual compensation, including salaries, fees, w.thdrawals, etc  (complete
   all columns).   (21 Names and compensation of all employees receiving in excess of  117,500 annually    (3) All stockholders having a 20% or more interest

                  Nome  (List first, middle, maiden & last )                                       .in
                        , r      ,,,                                          rtic    i, i ,       Annual       Percent      Guaranty       Corned for
                        (If no middle name, so state                           Office Held    ,-              -,     ,         rt,,   ,             ,    ,
                                                                                          Compensotion   Ownership      Offered        Benefit of
                     Home Address (Include ZIP Code)                                -                                  {Yes Qf No}








   *Life insurance on ownerfs? or pnncipsKs) will bf required ONLY  when specifically included  as  a condition  of an approved loan.
7  RECENT EFFORTS TO OBTAIN CREDIT  (For D.recf Loan Applicant. Only)' The SEJA ,. authorized to make loans to buainess enterprises only when the


   declining tu participate with SBA mult b« obtained from the following lending institution*   (a) The applicant's bank of account, and (b) If the amount of the



   CREDIT INFORMATION  Applicant expressly authorizes disclosure  of .11 information submitted  m connection with this spuhcation and any resulting loan
   desired)	^ _^		
   PARTICIPATION   Will any lending institution participate with  SBA  in the loan requested'  Q Yes   Q No  If "Ye," institution .h.11 execute  Appli-

                                                                                                                                      PAGE 1  OF .
SBA FORM 4 (11-71) REF  ND 510-1 A  REPLACES APPLICATION  FOR LOAN PARTS OF SBA  FORMS 4  PARTI  4 A, 6B .  527, 528 A.

                     394, 652 AND 6528
                                                        D-l

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    INSTRUCTIONS TO APPLICANT

    Direct Loans - Submit one copy of this form and all supporting documents la SBA

    Participation Loans - Submit two copies of this form  and  all supporting documents to  the participating bank
    All  attachments  must  be signed  and dated

    (0  SBA Form 912 must be submitted  in quadruplicate by  the proprietor, if a sole proprietorship,  by each partner,  if a
        partnership,  by each officer, director, and each holder of 20 percent or more of the voting stock, if a corporation,
        and other person,  including  a hired manager, who has authority to speak for and commit the borrower in the manage-
        ment of the business.  In addition, applicant must submit a  signed copy of SHA Form 641, "Request (OY Counseling,"
        w ith trie application.

    (2>  Attach to application a brief description and history of ;he business

    (3)  Comment briefly on the benefits the business will receive if the loan is obtained.

    (4)  Attach a schedule on all  installment debts, contracts, notes and mortgages payable, showing to whom  payable,
        original amount, original  dale, present balance,  rale of interest, maturity date, monthly payment, security  and
        whether current or delinquent.  (Amounts on this  schedule should  agree  with the figures on the applicant's financial
        statement.)  Indicate by an astenk (*),  items to be paid by  loan proceeds and reason for paying same.
    (5)  If construction is involved, slate the estimated cost, source of any additional  funds which may be required to com-
        plete the construction and whether temporary financing for the construction is  available.  Furnish preliminary plans
        and sppcifiraMnns wfh  'he application.  Finaj__jjlans and specifications must be submitted for SBA/Lender approval
        prior to commencement of construction  if loan is approvei"J!         ""     ~  " "      "
    (6)  Where loan funds will be used for construction  purposes, and  the contract or subcontracts are in excess of $10,000,
        the Applicant must execute and submit with the application "Applicant's Agreement of Compliance," SBA_£oiQl-fiDl-,
        which is a non-discrimination agreement issued pursuant to LVeculive Order 1 1 246.

 ^  (7)  Where purchase of machinery  and  equipment is  involved, furnish a detailed  list  of items to be purchased and the
        estimated  cost thereof.

    (8)  For each person listed in "Management" give brief description of education, technical training, employment and
        business experience.

    (9)  Attach  balance sheets for the past 3 fiscal years

  (10)  Attach  balance sheel  dated within 90 days from date of filing application with aging of acrounls receivable and
        payable.

  (11)  Attach  Profi t and Loss Statement for pa si three fiscal years and  for tis much of current vear as is available. (If
        operating statements arenol available, explain  why not and enclose corresponding Federal income tax returns in
        lieu thereof.) If pasi  earnings do nut show ability to repay proposed loan and existing obligations, attach an esti-
        mated profit and loss statement for at leasl one full year

  (12)  Reconciliation of net  worth sh
-------
 9   POLICY  AND REGULATIONS CONCERNING REPRESENTATIVES AND THEIR FEES An apphcam lop a loan Iron, SBA mat obtam Ihe .ssulance of
     ar,y attorney, accountant, engineer, appraiser or other representative lo aid him in the preparation of his application to SBA, however, such representa-
     tion is not mandatory  In the event a loan is approved, the services of an attorney may be necessary lo assist in iht preparation of closing documents,
     title abstract", etc  SBA will  allow the payment of reasonable fees or other compensation for services performed by such reprpsentatives on  behalf of
     the applicant.
     There ar no "authorized represent at i VPS" of SBA, other than <
                                                                                                                                                       :«]
     SBA Regulations (Part 103. Sec  103 13-5(c)} prohibit representatives from charging or proposing lo charge any contingent  fer for any  services performed
     in connection  with an SBA loan unless the amount of such fee bears  a necessary and reasonable relationship to the services actually  performed  or to
     charge any fee which is  deemed by SBA to be unreasonable for the services aclually performed, or lo charge for any  expenses which  are not deemed bv
     SBA to have been necessary m connection with  the applxalion   The Regulations (Part 122, Sec  122 19) also prohibit the payment of anv  bonus,  brok-
     In line with ihese Regulations SBA  will not approve placement or finder's fees for the u*e or  attempt^ u -
     an SBA loan, or fees based solelv upon a percentage of the approved loan or any part thereof
                                                                                                                             obtaining or (rvmg !
     upon the time and effort required, the  qualifications of the representative and the nature and extent of the services rendered  b\  surh  representative
     It is the responsibililv of the applicant to set  forth in the appropriate  section of the applit
     of the applicant.  Applicants are required  to advise the  SBA Field Office in writing of the
     cant subsequent to  the filing of the  application

     An> loan applicant  having an\  question concerning the payment of fees, or  the  re-ts*
     ihf  application is filed.

10   NAMES OF ATTORNEYS,  ACCOUNTANTS, AND OTHER PARTIES   The names of all attorneys, accountant-,, appraisers,  agen
     (whether individuals, partnerships, associations or corporations) engaged by or on behalf of the applicant  (whelher on  a salary,  r
     whether in money or other property of any kind whatever, by or for the account of the applic ant, together wi(h a d esc rip t ion of such <
     to be rendered, are  as follows
          Name and Address (Include  ZIP Code)
   Descnpt.on of Services
Rendered  and to be Rendered
Total Co'npen sahon
 Agreed to  be Pa>d*
     • Enn
                                     "Unknown," "Undetermined" orothe
11   AGREEMENT OF NON EMPLOYMENT OF SBA PERSONNEL   In consideration of the making bv SBA to applicant of all or  an> part of the loan applied
     for sn this application, applicant hereby agrees with SBA (hat applicant  will not, for a period of l*o years after di "bursemenl by SBA In  apphc an I of said
     loan, or any part thereof, employ or tender any office or employment to, or retain for professional services, any person who,  on the date of such disburse-
     ment, or within  one year prior to said date, (a) shall have served as an officer, attorney, agent,  or employee  of SBA and (b)  as such, shall  have occupied
     a position or engaged in activities  which SBA shall have determined, or  may determine, involve discretion with respect  to the granting of assistance un-
     der the Small  Business  Act, Or Economic Opportunity Act  or said Acts as they ma\  be amended  from time to  time

12   CERTIFICATION,  I hereby  certify  thot
    (a)  The Applicant has read SBA. Policy and Regulations concerning representatives and their fees ($9 abovel and has not paid or incurred  any obligation
        to pay, directly  or indirectly, any fee or other compensation  fur obtaining the loan hereby applied  for

     (b)  The applicant has nol paid or incurred any obligation to pay  to  any Government  Employee or special Government employee any fee, gratuitv or any-
        thing  of value for  obtaining the assistance hereby applied for   If such fee, gratuity, etc  has been solicited by anv  such employee, the applicant
        agrees lo  report such information lo the Office of Security  ind Investigations, SBA, 1 141 !  Street  %  W   Washington, D  C  20116

    (c)  All  information contained above and  in exhibits attached hereto are true  and complete to the best knowledge  and belief of the applicant and are sub-
        mitted for the purpose of inducing SBA to  grant  a loan or to participate in a loan by a  bank or other lending institution to applicant   Whether or not
        sals, etc , performed by non-SBA personnel  •
                                                               of applicant
    (d)  The applicant hereby covenants, promises, agrec-s and gives herein the Assurance  as required by 13 CFR 112 8 and CFR 113 4 that  in connection
        with  any loan to applicant which SBA may make, or m which SBA may  participate or guaranty as a result of this application, it  will comply  with the
        requirements of Parts 112 and 113 of SBA Regulations and Title VI of  Civil Rights Act of 1%4 u, the extent that said Parts 112 and  113 are applic-
        able  to such  financial assistance, and further agrees  that in the  event  it fails to  comply with said applicable Parts 112 and 112, SBA may call, can-
        cel, terminate, accelerate repayment or suspend in whole or in part the financial  assistance  provided or to  be provided by SBA,  and that SBA, or the
        United States Government may take  any other action that may be deemed necessary or appropriate to effectuate the  nondiscrimmation  requirements  in
        said Parts 112 and 113, including the right to seek judiciai  enforcement of the terms of  this ASSURANCE OF COMPLIANCE  These requirements
        prohibit discrimination on the grounds of  race, color or national origin  by recipients of federal financial assistance, including but not limited to em-
        ployment practices, and require  the  submission of appropriate reports and accegs to books and records, these requirements are applicable to af[ trans-
                                                                                       (Individual, general partner, trade name or corporation)
                                (Title)
           By	
           Title	
           Date Signed
Whoever makes  any  statement knowing it to be false, or whoever willfully overvalues  any  security, for the purpose of obtaining for himself or for an applicant
any loan, or  extension thereof by renewal,  deferment of action, or otherwise, or the acceptance, release, or substitution of security therefor, or for the purpose
of influencing in any way the action of the SBA, or for the purpose of obtaining monev, property, or anvth.ng of  value, under the Small Business Act, as amend-
ed, shail be punished under Section  I6(a) of the Small  Business Act, as amended,  by  fine  of not more than IT,000 or b\  imprisonment for not more than two
years,  or both.
                                                                      D-3
                                                                                                                                           PAGE  3 OF  4

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  APPLICATION FOR PARTICIPATION OR GUARANTY AGREEMENT
  (For use only by bank or other financial institution)
  We propose to  make a (check one)
  L~71  Guaranteed loan Bank Share	    %, SBA Share	
                                                                                                                       Bonk Transit No.
       Immediate participation loan  with bank to make and service,  Bank Share_
                                                                                           %, SBA Share
  To the Applicant named on page 1  of this  application.  We hereby make application for the type of participation agreement checked above subject to the
  following loan conditions (use separate sheet if necessary)
  (1) Terms and Conditions
      (a) Term of loan	years. Monthly payments,  including lender's interest at	% per annum, simple, in the amount of $_
      (b)  Collateral and hen position
       (c)  Guarantors
       (d)  Insurance  L ife, Hazzard, Federal Flood.
   >2)  Participation  SBA prefers that a lender participate beyond the total existing debts owed the lender which are to bf refinanced through the loan.
       Existing obligations owed to the lender may be refinanced through the loan, in accordance with the  mimmums set forth below, only v.hen the lender
       certifies in writing  that such debt is in  good  standing (payments and other obligations handled substantially as agreed) and is satisfactory in all
       respects  Lenders  minimum share  of a loan shall be

       lal  Guaranty • 10"£  for SHA  loans and as currently applicable for Economic Opportunity Loans.

       (b)  Immediate Participation - 25%  provided the legal lending limit permits,  lO'f for Economic Opportunity [ oans.

   U)  Interest Rate  Lender may establish its own interest rate provided it is  legal and reasonable, subject to SBA's approval,  H tender's interest ex-
       ceeds 8 pfn eni per ^nnum i simple] on  a guaranteed loan SBA  will  pay accrued m'erest to the date of purchase on its guaranteed portion at  the sim-
       ple  annual rate of R per cent without any future adjustment for unpaid accrued interest in excess of  this effective rate   Lender may use an  add-on
       interest provided  di State law permits.  (11) the face of the SBA  Note shows the principal amount of  the actual dollar amount disbursed or to be dis-
       bursed u> (he borrower under the loan and  all other SBA documents show this amount of principal,  (m> interest is converted to R simple annual inter-
       em  rate and such converted  rate is  shown on all SBA documents other than  the note (The add-on interest rate should be specified  on the Note, if
       necessary,  to comply with State law, otherwise show the simple interest  rate.)

   i 4^  Comments of the Dank, which may  be in the form of a letter or memorandum, shall

                    n P\ aluation of ability of  Applicant's management, its  past record of handling obligations, your expression as to v,hat the loan will rto
                   cant applicant'^ rcpavment ability. ,ind other pertinent information   If \pphrnnt or  an\ of its officer* ha\e been adjudicated a bankrupt

           collateral if available and  \our evaluation of 11 * ddequacv  to  secure the loan.

       (b)  state whether an> officer, direcior  or substantial stockholder of Bank has a financial interest in Applicant and. if so, the extent thereof,

       (c)  indicate whether Applicant, its subsidiaries or  affiliates, is indebted to the Bank,  the amount, terms, and how  secured, including any  guaranties,
           and whether applicant's loans  have been met  substantially as  agreed.  (Include  all such loans made during the past 12 months, showing high and
           low credit by months  If no loans were made  during the period,  so state.)

       Without the participation of SB^ to  the extent applied for  we would not be willing to make this loan   In our opinion, the financial assistance applied
       for is not otherwise available on reasonable terms.
                                                                                              - and address of bank (Include ZIP Code)
   Telephone No
                                                                                                      Authorized Officer
SBA, FORM 4  (11-711
                                                                                                                                PAGE 4 O F 4

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      PERSONAL FINANCIAL STATEMENT
  As or
                                                   Return to:
                                                            Small Business Administration
                                                                                                        Far SBA Use Only
                                                                                                      SBA Loan No.
 Name and Address. Including ZIP Cod*    (of person and spouse
 submitting Statement}
SOCIAL SECURITY NO.
 Business (of person submitting Statement)
 This statement is submitted in connection with S B.A. loan requests
 or granted to the mdividuaf or firm, whose name appears below;

 Nam* and Address of Applicant or Borrower, Including ZIP Code
                            Please answer all questions using "No" or "None" where necessary
                           ASSETS
                                                                                       LIABILITIES
Cash on Hand & in Banks ...   	
Savings Account in Banks     	
U  S Government  Bonds .        ,  . .
Accounts & Notes Receivable
Life Insurance-Cash Surrender Value Only
Other Stocks and Bonds .   .
  (Describe - reverse side - Section 3)
Real Estate           .  , .
  (Describe - reverse side - Section 4)
Automobile - Present Value
Other Personal Property
  /Describe - reverse side - Section 5)
Other Assets
  (Describe - reverse side - Section 6)
Accounts Payable
Notes Payable to Banks ....
  (Describe faefow - Section 2)
Notes Payable to Others
  (Describe below - Section 2)
Installment Account (Auto)    .
    Monthly  Payments S
Installment Accounts (Other)  . .
    Monthly Payments S _ , _
Loans on Life Insurance       ....
Mortgages on Real Estate
  (Describe • reverse  side - Section 4)
Unpaid Taxes
  (Describe - reverse  side - Section 1)
Other Liabilities
  /Describe - reverse  side - Section 8)
Total Liabi httes
Net Worth     .                 .

               Total
Section t.  Source of Income
  {Describe tjelow oil items hsttd in ihis Section)
                  CONTINGENT LIABILITIES
Salary
Net Investment Income.
Real Estate Income
Other Income  (Describe)
As Endorser or Co-Maker
Legal Claims and Judgments
Provision for Federal Income Tax
Other Special Debt
Description of items listed in Section I
Ltfe Insurance Held (Give face amount of policies - name of company and beneficiaries)
                                            SUPPLEMENTARY SCHEDULES
Section 2.  Notes Payable to Banks and Others
 Name and Address of Holder of Note
                                            Amount of Loan
                                      Original Baj.     Present Bal
        Terms of
       Repayments
Maturity
of Loan
How  Endorsed, Guaranteed,
        or Secured
                                                  D-5

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No of Shares





Names of Securities





Cost





Market Value Si
Quotation





itemtnt Date
Amount





Section 3   Other Stocks and Bonds
                                        listed and unlisted Stocks and Bonds  (Use seporate sheet if necessary)
Section 4   Real Estate Owned  (List  each porce/ separately   Use suppfementol sheets if necessary   Each sheet must be identified as a
supplement to this stotement ond signed)   (Also odvises  whether property is covered by title insurance, abstroct  of tit'e,  or both)
                                                                   Type of property
Address of property  (Cny and State)
                                                                   Original Cost to (me) (us)  J,
                                                                   Date Purchased
                                                                   Present Market  Value       S ,
                                                                   Tax Assessment Value     $_
Name ind Address of Holder of Mortgage (City  .ind State)
                                                                   Date of Mortgage
                                                                   Ongmal Amount
                                                                   Balance
                                                                   Maturity
                                                                   Terms of Payment
Status of Mortgage, i e ,  current or delinquent  If delinquent describe delinquencies
Section 5  Other Personal Property   (Describe  ond if any  is mortgaged, state name and address  of mortgage holder and amount of mortgage
                                     terms of payment and if delinquent, describe delinquency }
Section 6  Other Assets   (Describe)
Section 7  Unpaid Taxes  ('Describe in deroi/  as to type, to whom payable, when due, amount, and what, if any, property a tan den, if
                           on/ attaches)
Section 8  Other Liabilities  (Describe  in deiail)
(I) or (We) certify the above and the statements contained in the schedules herein is a true and accurate statement of (my) or (our) financial
condition as, of the date stated  herem.  This statement is given  for the purpose of:  (Check one of the following)
            Q Inducing S B.A. to grant a loan as requested in  application, of the  individual or firm whose name appears herein, in
                connection with which this statement is  submitted.
            LjFurmshing a statement  of (my) or (our) financial condition, pursuant to the terms  of the guaranty executed by (me) or
               (us) at the  time S B A  granted a loan to  the individual or firm, whose name appears herein.
                                                                     Signature
                                                             Page 2
                                                          D-6
GPO 802.622

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                                  SMALL BUSINESS ADMINISTRATION
                                     REQUEST FOR COUNSELING
           I request appropriate management or technical assistance from the Small Business Administration.

           It is understood that such assistance will be provided to me free of charge and that I incur no
           obligation to reimburse SBA or its counselor(s) providing such assistance.

           I authorize SBA to furnish information and data concerning me to the counselors) providing such
           assistance.

           I understand that the counselor(s) providing assistance to me have agreed that they will not:

             (1) recommend  the purchase of goods or services from sources in which he  has an interest.
                 or represents, and

             (2) accept fees or commissions from third parties who have supplied goods or services
                 to me on their recommendations

           This request may  be withdrawn at any time upon written notice to SBA unless  I am an
           SBA borrower.

           In consideration of the furnishing of management and technical assistance to me, I waive all
           claims against SBA personnel or counselors arising in connection with this assistance.

SCORE-ACE

Type of Service Requested (Check Appropriate Box)
SBI
406
Prof. Assoc.
Complete Below and Sign
Name of Company
Telephone
Address (Include ZIP Code)
Referred to SBA By
Type of Business
Signature and Title of Company Official
Date
SBA FORM 641 (6-75) PREVIOUS EDITIONS ARE OBSOU ETE.    PLEASE BE SURE TO COMPLETE REV ERSE SIDE OF TH IS FORM
                                              D-7

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 Data To Be Completed By Applicant
For the assignment of a qualified counselor(s). p/eose complete this questionnoire before returning to S8A. Any infor-
mation given here or during counseling will be held in strictest confidence. (SBA personnel:  insert address of your
local office below)
 soon os you hove completed this form and returned it to the address given above, j  counselor will be assigned
                                                                                                to you.
 I request counseling regarding (check appropriate boxes):
 CD My present business       Year founded	 CD Starting a new
 I  I Purchasing a business     No. of employees            business
                                                                              [3D Sole Proprietorship
                                                                              CD Partnership
                                                                              CD Corporation
 Kind of business and goods (or services) offered are as indicated below:
CD Retail (Selling)	
CD Service (Kind)  	
CD Manufacturing (Product)
                                                  CD Wholesale (Selling)
                                                  CD Other (Specify)	
                                                      Years of experience in
                                                      this kind of business _
 Can you furnish a recent balance sheet?    CD Yes  CD No  Have you ever applied for an SBA loan?  CD Yes CD No
 Can you furnish a recent profit-and-loss                     Do  you  now have an SBA loan?          CD Yes CD No
 statement?
                                        CD Yes  CD No
Check the problem areas for which you seek counseling
     CD'- Sales  promotion & advertising
     CD 2. Purchasing
     CD 3. Engineering and research
     CD 4- Financial analysis
     CD 5. Foreign trade
     CD 6. Records & Credit Collections
     CD 7- Market Research
     CD 8- Personnel
                                                           CD 9- Office & Plant Management
                                                           CD'O- Government Procurement
                                                           C.] 11 • Merchandising, inventory
                                                                  selection & control
                                                           CD 12.
                                                           CDi3.
                                                           CD 14.
                                                           CD 15. Other
 If the following information is available please complete, if not,  leave blank.
 Employer's ID # (IRS)
                               Social Security Number
           Loan Number
 Viet. Veteran
              LI Yes  CjNo
                               Veteran
                                       CD Yes  C J No
Name of County
 What in your opinion is the greatest problem in your business operation?
SBA FORM «41 (6-751
                                                 GPO 697.938
                                                                                                       Pace 2
                                                     D-8

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                                                                                Return Fxecuted Copies 1  2  and 3 To SBA
                                 United States of America

                         SMALL  BUSINESS ADMINISTRATION

                         STATEMENT OF PERSONAL HISTORY
 Pleas* R«od Car*Mly • Print or Typ*

 Each member ot the small business concern requesting
 assistanie 01 the development compaiiy must submit this
 form m TRIPLICATE for filing with the SBA application
 This foirn must be filled out and submitted

 I  I* o so'ft propr etorship by  the proprietor
 2  tf o partnership by eoch fjnrtnei
 3  If a corporation or o development fompany  by eoch oHite
    dirertor and additionally by eoch holder of  20% or mare
    of  the vot.ng stock
 4  Any other person including a hired manager, who has
    authority to speak for and commit ihe borrower m the
    management of trie business
 Name and Address of Applicant (Firm NameKStreet, City. State and ZIP Code)
 1   Personal Statement of (State name in full, if no middle name, state
    (NMN), or If initial only, indicate initial)  If married include name of
    spouse  List atl former names used, and dates each name was used
    Use separate sheet tf necessary
    First          Middle         Maiden            Last
    Name of Spouse (Include former married names and maiden name)
3. Place ot Birth  (City & State or Foreign Country)
 4  Give the percentage of ownership or stocK owned or to be owned in the
    small business concern or the Development Company
 5  Present residence address
    From                To
    Immediate past residence address
    From                To
                                                                                           SBA District Office and City
                                                                                           Amount Appfied for
                                                                            2 Date of Birth  (Month, day and year)
                                                                             U.S. CiM«n*
                                                                                              yes
 If no, give alien registration
   a
Social Security No
                                                                             City
                                                                                                                      State
                                            Address
   BE SURE TO ANSWER THE NEXT 3 QUESTIONS CORRECTLY BECAUSE THEY ARE IMPORTANT.

   THE FACT THAT YOU HAVE AN ARREST OR CONVICTION RECORD WILL  NOT NECESSARILY DISQUALIFY YOU.
   BUT AN  INCORRECT ANSWER WILL PROBABLY CAUSE YOUR APPLICATION TO BE TURNED DOWN.

 6  Are you presently under indictment  onparole or probation7
        Yes
                             If yes furnish details in a separate exhibit List name(s) under  wh-ch h« id if applicable
 7  Have you ever b^en charged with or arrested 'or any criminal of/ense other than a minor motor vt "iclo wolatun'*

    LZJ Yes    L_l No       If yes  furnish details m a separate exhibit LIST namelsJ under which charged  if applicable

 8  Have /oj e^er been convicted of any cnmnal offense other than a minor mn'or vehicle vio'ition?

    l__J Yes    I	1 No       If >es furnish details in a separate exhibit Lisl name's) under which convicted t! applicable
 9  Name and address nf participat'ng bank
  The information on this form will be used m connection with an investigation of your character Any information you wish to
  submit, that you feel will expedite this investigation should be set furth
  Whoever makes an> statement knowing it to be false, for the purpose of obtaining for himself or for iny applicant, an\ loan, or
  lojrt extension by renewal, deferment or otherwise, or for the purpose of obtaining, or influencing SBA toward, anjthmg of value
  under the Small Business Act. as amended, shall be punished under Sec'ion 16(dt of that Act. \,y a fine of not more than $5000, or
  by imprisonment for not more than 2 years, or both.
 Signature
                                                                                                                 Date
 !' is ogartsf SBA s pol'Cy 'o provide OiSfS'once to oerso^s not of good character aid i^e'^fore consxtero' on  $  j'v-
 iro Is of o person favorable and unfavorable  relo'ing thereto mriud -ig bchavio-  inte^riiy  condor and disposit ; *~
 e!iec> of such assi-Honce wiH be to encourage or support  directly or J'.iJ'r
                                                                                tcol to the Secwrjty o{ 'he U'>'c-d Stores
SBA FORM 912 (4-75)  SOP 50 1O 1 PREVIOUS EDITIONS ARE OBSOLETE
                                                                         D-9
                                                                                                       SBA FILE COPY

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                                                     PAGE 1
                                          Summary  of Collateral

         OFFERED  BY APPLICANT  AS SECURITY FOR LOAN AND SBA APPRAISER'S VALUATION  REPORT
 Name and Address of Applicant: I Include Zip Code)	
                                                                                         EMPLOYER ID NO.
                                                                                          SBA  LOAN NO.
                          IMPORTANT INSTRUCTIONS FOR PREPARING THE  LISTING OF
                                 COLLATERAL  OFFERED AS  SECURITY  FOR LOAN
     Page 1. Summary Of Collateral Offered By Applicant As Security For The Loan; This is a summarization
 of the detailed listing on SBA Form 4, Schedule A. If collateral is to be acquired, with proceeds of loan describe the col-
 lateral in detail on an attachment to Schedule A with the notation "To be acquired".
     Show exact cost. If assets were acquired from a predecessor company  at a price other than cost less depreciation.
     The figures to be entered in the net book value column must agree with the figures shown in the balance sheet, on page
 2 of the application, except for the assets, if any, not being offered as collateral and  non-business assets, if any, which are
 being offered to secure guarantees.
     If a recent appraisal has been made of the collateral offered, it should be submitted with the application.
     Any  leases on land  and buildings must be described, giving date and term of  lease, rental, name and address of owner.
     Page 2.  Real Estate;
     Item  1 - 1-anil And Improvements!  I a I  legal description from deed  on  the  land • location • city where deed is  re-
 corded.  Book and page  numbers of Official Records.  Describe the land improvements such as paving, utilities, fence, etc.
 Ib) cost of land when purchased.
     Item  2  - Buildings; I a I  general description, describe each building or structure on the  land.  Include  size, type of
 construction,  number of stories, date erected, use and condition,  tbl  amount of taxes and the assessed value from tax bills.
 Icl total amount of income received In owner from rental of the described properly,   id) cost of building when  purchased.
 INADEQUATE OR POORLY PREPARED LOAN APPLICATION  AND LISTING OF COLLATERAL ON PAGE
 3 WILL CAUSE RELAY IN THE PROCESSING OF LOAN APPLICATIONS.
     Page 3  - It is most IMPORTANT that applicants make an ACTUAL PHYSICAL INVENTORY OF THE EQUIP-
 MENT being offered as collateral.  DO NOT  TAKE FROM  BOOK  RECORDS. Actually list each in accordance with
 the classification, e.g.: 1   Machiner\ and Equipment: 2. Automotive Equipment: 3. Office furniture and equipment; 4. Other-
 jigs, dies, fixtures, airplanes, etc.
     Page 4 - Is a continuation of Equipment being offered.
  Group  items in accordance with the above classifications
         Show: manufacturer or make, model and serial numbers, size. )ear, whether purchased new, used, or rebuilt.
         BE  SURE ITEMS LISTED CAN BE READILY  INSPECTED BY SBA APPRAISERS
















NUMMARY

Item

1. Land and land improvements
2. Buildings
3 Machinery and Equipment
4 Automotive Equipment
5. Office furniture and equipment
6. Other
7. Total
8. Real and chattel mortgages (Not to be
paid from SBA loan req. ) Attach details
9. Equity
10. To be acquired (Cost)
11. Total



Cost








X X X X
xxxx





Net Book Value










XXXX




by applicant





























    THE APPRAISER CERTIFIES thai he  has personally and thoroughly inspected the collateral as listed in  this Report. Furthermore,
 at,  of -—_	 the market values  shown in the above Summary  are fair and reasonable as of that dale.  Additional  com-
 ments are attached to this Report.
    BA Appraiser's Signature
                                                                                                 Date of Report
SBA Form 4 Schedule A (8 66) REF ND 5KM4 prevlo
                                      of therli 1,2 and 3 a

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                                                       PAGE 2
                                                    Real Estate
           OFFERED BY APPLICANT AS  SECURITY  FOR  LOAN AND  SBA APPRAISER'S  VALUATION REPORT
   Name and Address of Applicant (include Zip Code)
                Parcel  number
                                                                                              SBA LOAN No.
   Address of Realty  Offered
                Title data:   Q Title Insurance  D Abstract
                            D Other (indicate)
                Realty in name of	
                Recorded Book	Page	 County.
   1.  Land and land improvement* (Do  not include buildings • see Sec. 2 below)
       Cost-
       Legal description (Attach if too long) *
                         date  acquired-
   1 If available, attach plat iiirvey.
   2.   Improvements
Cost (If separate from land) t-
       Biiilding description: List  each building separately with brief description and dimensions.
    facome if Applicable.
   Rent |-
                    Monlh D  Annually D  Lease Q
                                                       — Term.
                                                                                           Assessed Value
                                                 Land 	
                                                 Improvements
                                                 Taxes _____
SBA Form 4 Schedule A (8-B«) prevfoiu Hltiona are obsolete
                                                             D-ll

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                                                            PACE 3
Personal Property (Chattels)
OFFERED BY APPLICANT AS SECURITY FOR LOAN AND SBA APPRAISER'S VALUATION REPORT
Mir fnllowmg dcsdibcd i battels art- located or headquaitered at timlude Zip Code) 	 	
\bn\e location Downed 1 t leased ( 1



EMPLOYER ID NO

SBA LOAN NO.

II is most IMPORTANT that applicants make an ACTUAL PHYSICAL INVENTORY OF THE EQUIPMENT
liein« olTried as collateral. DO NOT TAKE FROM BOOK RECORDS. Actually list each item in accordance with the
classify jiiun. ep.:* 1. Machinery and Equipment 2. Automotive Equipment 3. Office furniture and equipment
4. Other - jigs, dies, fixtures, airplanes, etc.
Show: manufacture! o\ make, model and serial numbers, size, year, whether purchased new, used or rebuilt.

List chattels at different locations on separate sheets.
" Description of
















































Model














































Serial
Number














































New
Used
Rebuilt














































NOT TO BE USED
BY APPLICANT
Cond.














































Carry Tolais of Each Classification to Page 1 Total
(Summary) Lines 3, 4, 5, and 6.
Market
Value















































INADEQUATE OR POORLY PREPARED LOAN APPLICATION AND LISTING OF COLLATERAL WILL
CAUSE DELAY IN THE PROCESSING OF LOAN APPLICATIONS. BE SURE ALL ITEMS CAN BE READILY
INSPECTED BY SBA APPRAISER.
1
(Signature of owner, partner, or corporation officer) (Title)
"f I*1"
(Niime of Firm)
certify that the above mat him-r> and i qmpment listing represents an actual physical inventory taken on
Mark item*. 1 in » olumn 21 with an asterisk if they are subject to conditional bills of sale or chattel mor
he paid off from an sli\ loan. Carry total of such balances to line 8, page I (Summary).
(date)
gages the balance of which will not
SBA. fcorm 4 Schwlule A. lS-bb) previous e
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PACE 4
Continuation of Personal Property (Chattels)
Description of



























Model

























i

















































































Serial
Number


































































New
Used
Rebuilt


































































NOT TO BE USED
BY APPLICANT
Cond.


































































( din Inidh of Ej(h Classification tu Pag.- 1 Total
1 summjr^ i line-, t 4, S. and 6
Market
Value



































































      D-13

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                              SUMMARIZED LIST OF COLLATERAL
                                Abcr/v lo~9.-,ion is Orn-ii (   )   Leased (  )
         «It is ir^o-tant thAi applicants cake an AjtujJL r'hysical Inventory Of the Equipment
     offered aj collateral/ Do not take froa book recjoi-ds.  Actually list eaca itsra in
:cordanca vlth the cla33ifieatior., «.-.:  *1.  Machinery and equipment 2.  Autcsotire equip-
sri 3.   Office fur.nit'Are and equipment.
 •      Other - jigs, dies, fixtures, airplanes, etc.
 ^      Show:  Manufacturer or make, nodel and serial rubber, size, year, vhether purchased
                new, used or rebuilt'.
 I

         List Chattels at different                                Serial
         locations on neparat" sheets              Model           Kuaber          New,  Used,
                                                                                      " built
 t
  r
j
 i
 j
 t
 I
 I
4
        e or ^oorly -srsDir^d lo=iri application and listins of coll^!;•eral vill cause jl^liy in
   oro ; : 3 a i .T^ or lo?.n applic?.tioas.                  D-14

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                         AUTHORIZATION TO DISCLOSE  n^03MATioi:








         The undersigned,  applicant  for Soall  business Administration  financial




assistance, vhether in the fors  of a direct loan  or a participation lean,  dees




expressly authorize Srall  Business Administration to disclose any or all




Inforrr-ation subrarfcted "by the touiersigaed  in connection \rith the urtdartJignsd'e




Application for financial  assistance to undersigned's oanlc of accoi^nt,  if any,




and to any otrzer financial institution qualiixea  -co participate vith. Scroll




Business Adoinist.ra.tion;^ pro^T-ded,, hovavar, that  any such, disclosure -rd.il "be




solely for tha  purpose of  inducing such financial institution to  grant -the




financial assistance  requested either directly or in participation vith Strail




Business Adoinistration.




         Executed the 	 day of           __                  , 19
Coroorate Seal                             By
                                 D-15

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                 SOPPLEMBI'IT TO APPLICATION FOR SMALL LOAN
NAME:
LIST I-JAI-S3 A'.'D ADDRESSES 0? YOUR EMPLOYERS  FOR TKS PAST FIVS YEARS






Present Employer:
                    (Naniej                        (Address)





Previous Employer:
Previous Saployerr
                    (Llase)                    '    'Address V
 PLZAJE INDICATE YOUR ILAP.IIAL STATUS BELOW
 X^rried                Seoarated                Divorced
 Sin~lc (never xarried)               Nirnber of dependent chilcran.
 LIST NAI-S3 A!ID ADDRESSES O7 CHEDIT REFERSL'CES:
 "[HJUT-e)                               (Address)                 (Acct. Nunbar,
                                       rAddress)                 (Acct;. :.'unbar )
                                       (Address)                 (.Acct.  Llunoer
 f i ;?.r.3)                                (Adaress)                  (Acct.  2::x~:b2r
 LIST THE NAME AiiD ADDRESS OF YOUR h'SARfoT  RZu\Tr/E NOT L.r/n;3 -.-/ITh' YOU
                                                D-16

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O
                                                       D-17

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                    APPENDIX  E

           PILOT PROGKAM GUIDELINES AND PROCEDURES
        FOR THE POLLUTION CONTROL, FINANCING PROGRAM

                             November 17, 1976

  The information contained herein is for the purpose of establishing
  some basic guidelines and procedures under which to operate a "pilot
  program" for the pollution control financing program and will be changed
  from time to time as experience dictates.  Final Rules and Regulations
  will be published for  comment at a later date and may or may not take
  the form  outlined in these Guidelines and Procedures.

                          CONTENTS

                                                              Page
  I.  INTRODUCTION	       I

     A.  Background	       1
     B.  Scope	       1
     C.  Projection of  Demand	       2

 II.  APPLICATION PROCEDURES	      3

     A.  Basic  Requirements	      3
         (1) Size  Determination	      3
         (2) Longevity and Profitability	      3
         (3) Evidence of Need	      3
         (4) Terms	      4
         (5) Amount	      4
     3.  Additional Requirements	      4
     C.  Credit Criteria and Requirements	      5
     D.  The Issuer	      6
     E.  SBA Commitments	   6-7

UJ.  DETERMINATION OF F EES	      7

     A.  Guarantee Fee	      7
     B.  Processing and Administrative Fees	   7-8

IV.  LOSS MITIGATION	      8

     A.  Statutory Provisions	      8
     B.  Compliance with the Statute		  9-10

  V.  APPLICATION FORMS	  Appendix

     A.  Part I -  Small Business Concern	  Appendix
         Part n - Qualified Sponsor	  Appendix
     B.  Issuer's Request for  Guarantee Commitment  ....  Appendix
                        F-l

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I.  INTRODUCTION

   A.  Background:  Public Law 94-305, effective June 4, amends Part A
        of the Small Business Investment Act to authorize SBA'to guarantee
        the  payments under qualified contracts entered into by existing
        small business concerns for which there exists a financial or
        operational disadvantage, for the purpose of acquiring pollution
        control facilities.  The statute specifically provides that the  finan-
        cing of the pollution control facilities may be provided through
        industrial revenue bonds, issued by a'STaTeTor political subdivision,
        on which the interest is exempt from federal income tax under the
        income Tax Code.

        This type of financing has been extensively utilized by large busi-
        nesses for their financing of pollution control facilities.   Essentiall
        a public entity issues tax exempt revenue bonds on which repayment
        is based  solely on the credit of the business.   The payments  on and
        redemption of the bonds are made by a trustee for the public entity
        from those payments received from, the business  in fullfillment of
        its contract between the business and the public entity.  The  public
        entity is  the nominal owner of the  property; the property is conveye
        to the business under a lease,  lease-purchase, installment sales or]
        similar contract.  In addition to the tax exempt advantage, the
        business can also utilize other tax advantages  such as the investment
        credit and accelerated depreciation.                               I

        Because  of its generally limited credit history and the small size of
        its financing requirements, a small business is usually unable to
        utilize this method  of financing.  PL 94-305 makes available SBA's
        guarantee on the  payments made by a small business to a public
        entity so that the small business can take advantage  of this type of
        low cost  financing.

    B.  Scope: The primary purpose of using tax exempt industrial revenue
        boncTTinancing for pollution control facilities is to obtain the  most
        advantageous interest rates and repayment terms possible.   Tax
        exempt bonds may be issued with a sinking fund provision for
        redemption at particular dates or  may be in  serial form with varyinM
        'maturities up to 25 or 30 years.  The  interest rate may be the same"
        for  the full issue or it may vary according to maturity and market
        conditions.  Discussions with bond underwriters revealed that the
        interest rate for  a bond issue with SBA's guarantee of the underlyin
      .  payments would be  comparable to  AAA municipal bond rates.
                                            1
-1-
E-2

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Most favorable interest rates are /fenerally available only on large
bond issues ($5 million and up).  Therefore, it is envisioned that
the pollution control financing needs for several small businesses
would be combined into a single bond issue rather than several
small issues.  SBA would then provide a guarantee of the payments
of each small business on the underlying contract which  are  assigned
(by a public entity - the Issuer) to a trustee.  The payment of the
bond issue v/ould be tailored to meet the needs of the small businsses
involved and the prevailing conditions in the tax exempt market.

While industrial revenue bond financing normally provides for the
most favorable repayment terms and the lowest cost to the borrower
there are instances where the small business may need a relatively
small amount of financing.  In those instances where the small business
certifies that revenue bond financing is impractical or when the project
may not qualify for the tax-exemption, it may be possible  that financing
                             'Section 7(a)(5) or 7(g) of the Small Business
Act, or that a guarantee may be provided to a lender under a straight
(taxable) loan.

Projection of Demand:  Available data is sparce en the needs 01
small business for their pollution control financing.  A study
conducted for the Environment Protection Agency* estimated that
between 38, 000 and 56, 000 small firms have permits to disc/large
into streams and rivers.   The number  of these requiring financing
for pollution control can only be guessed at.  No similar figures
are available on air pollution, but the number is believed to
be larger.

The following estimates were developed in  1973 by the SBA and
representatives of  several bond underwriting firms.  No new data
is available that would change these estimates.  The estimates are
based on the assumption that the average financing for a single
small business would be $400, 000.  The information is presented
in dollars of bond financing, anticipated number of small businesses
and the number of bond issues for the first 2 years of the program
after an initial pilot period.   Each bond issue is expected to provide
the financing for 5  to 10 small businesses.

                                               Most
First Year                 Pessimistic       Probable      Optimistic
Amount "oTlTinancing       5TO~ million"    $1~00  million    $1?I>0 million
No. of Small Businesses       100              250            500
No. of Bond Issues           10-20            25-50          50-100
* Alet Associates Inc.  "Analysis of Allemate Procedure for certification
  of Sec.  8 Small Business Water Pollution Control Application"
  Cambridge, Mass., April 1976.
                         -2-
                         E-3

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         Second Year               Pessimistic         Probable     Optimise
         Amount of Financing      $100 million       $300 million   $600 mil
         No. of Small Businesses       250               750            150(l
         No. of Bond Issues           25-50             75-150        150-3

        Because of the time limitations inherent in the Environmental laws,
        it is anticipated that applications for financing will be at substantial
        levels  through 1982 and assuming no changes in the laws, the number
        of applications received should decline rapidly to a point where no
        new applications are received.  At this point, only servicing of
        outstanding contract will be required.  However,  because by its
        nature environmental protection (pollution control) is an ongoing
        problem, it is difficult to determine at what point there will no
        longer be a need for SBA's assistance to small business in this
        area.

II.  APPLICATION PROCEDURES

    A.  Basic Requirements:

       The  statute requires the SBA guarantee to be for the full amount of
        the  payments due under the qualified contract.  The statute also
        requires the  SBA to make a determination that a reasonable expecta-
        tion exists that the  small business concern can meet the conditions
        and covenants of the underlying qualified contract.

        Because of the expected long useful life of pollution conti^ol facilities,
        the term of financing required  is also expected to be long.  These
        facilities, by their nature, are non-productive assets of a business,
        therefore amortization of the loan to finance their purchase must
        come from existing cash flow.

        SBA recognizes that there is substantial risk involved in guarantying
        100% of the payments on long-term contracts where the equipment
        involved is a  non-profit making asset.  Therefore, the following
        basic requirements have been established:
                 Dste rmination :  The applicant must meet the size standards
            set forth in Section 121. 3-11 of the SBA Rules and Regulations.

        (2)  Longevity and Profitability:  The applicant must have been in
            BUslness for a minimum of five years,  and have a history of
            profitable operations,  on average over the last three fiscal
            years.

        (3)  Evidence of Need: The applicant must  provide evidence of the
            neecfTor the pollution control facility (from the state or federal
            pollution regulatory  authority).
                             E-4

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    (4)  Term: The repayment term of the requested guarantee shall

        not exceed 25 years.

    (5)  Amount: The amount of payments to be guaranteed shall
        riot exceed $3, 000, 000.

B.  Additional Requirements:

    The SBA  guarantee under this program extends to the payments due
    by the small business concern under a qualified  contract to acquire
    a pollution control facility.  Therefore,  the small business concern
    is required to submit to the SBA,  the Qualified Sponsor, the Issuer
    or other such designated entity the following additional information:

    (1)  SBA  Form 912 on all officers, directors,  holders of 20% or
        more of the voting stock, all partners and proprietor of the
        applicant small business.

    (2)  Annual financial statements for trie preceding three fiscal years.
        (Audited statements  are required from those applicants where
        the guarantee request is $500,000 or greater,  and annually
        from all applicants subsequent to SBA's issuance of its guaran-
        tee).

    (3)  Interim financial statements (not older than 90 days).

    (4)  Proforma financial statements after giving effect to the financing
        applied for.

    (5)  Financial data on all affiliates.

    (6)  Description of the components and estimated total cost of the
        pollution control facility to be financed.

    (7)  A certificate  or a copy of the permit to operate from the
        appropriate pollution regulatory agency that the  pollution
        control facility, when completed in accordance with the
        plans and specifications, will help prevent, reduce, abate,
        control noise, air or water pollution or contamination.

    (8)  An opinion from the consulting engineer responsible for the
         design of the facility, that the facility when completed will
         meet the required pollution control standards or regulations.

    (9)  Evidence that the construction/installation of the facility
         is on a fixed price basis and the construction/installation
         and the cost  of material and equipment is adequately covered
         by surety bonds.


    (10)  The personal piiarantee of the applicants principals and/or
         life insurance lor the amount of the contract may be required.

                       -4-
                       E-5

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C.  Credit Criteria and Rcquii emc-nts:

    The statute requires that before SBA can issue its guarantee it
    must  determine that there exists a reasonable expectation that the
    small business concern will perform the covenants and conditions
    of the qualified contract.  Accordingly,  SBA has established cer-
    tain credit criteria to  satisfy this requirement and with which to
    determine that:

       (1)  The applicant's general business trends compares favorably
           to that of its industry.

       (2)   The proforma cash flow  reflects  the ability of the applicant
           not only to meet the obligations under the qualified contract
           but also the additional debt burden of maintenance and
           service of the facility.

       (3) The proforma  cash flow, current ratio, tangible net worth
            ratio and the "Fixed Obligation Coverage Ratio"*, after
            consideration  of the new financing, are realistically adequate
            for the applicant to meet its obligations under  the financing.

                                        Net Available Cash Inflow
    *Fixcd Obligation Coverage Ratio =
                                        Total Required Cash Payments

    Net Available Cash Inflow:          Total Required Cash Payments^

    Add:  Net Income After Tax         Add:  Interest on Debt
          Interest on Fixed Obligations        Lease Obligations
          Lease Obligations (Real             Debt Repayments
            Estate  and others)
          Depreciation

    Less:  Fixed Asset Expenditure (Cash Portion)

    The Procedures to determine eligibility and creditowrthiness
    of the applicant business \vill be a complete review and analysis
    of the application, financial information,  certifications, etc. by
    the qualified sponsor, the issuer of the bonds and SBA.

    In addition to the data and opinions required in Part II of the
    application, the qualified sponsor (usually the bank of account
    of the small business),  after its review and analysis,  will issue
    an opinion to the Issuer and SBA as to the creditworihiness of
    the small business in accordance with SBA established credit
    criteria and requirements.  The financial analysis must include
    the composition and adequacy of the small busines concern's:

                          -5-
                         E-6

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           1.   Annual fixed debt requirement.
           2.   Past and projected earnings.
           3.   Working capital sufficiency to support projected
           4.   Debt to net worth ratio.
           5.   Realistic cash flow projections to meet bond indebtness
                and other amortized  debt.
           6.   Economic outlook of  the industry of which the small
                business is a part.
           7.   Interim financing if required.
           8.   Estimated construction time of the facility.
           9.   The age, health and track record of principals (manage-
                ment).
          10.   The additional financing necessary, if entire amount of
                purchase not eligible for tax-exemption
          11.   The likelihood for the need to purchase management
                and/or technical assistance.

    In those  situations where appropriate, the  qualified sponsor may be
    required to furnish its opinion of the market value of other collator
    offered under a forced sale situation (with  a list of the existing
    amount of outstanding liens thereon).

D.  The Issuer:

    The state,  a political subdivision thereof or other public
    body  having the authority to issue revenue bonds v/ill
    usually be  the entity to request SBA's commitment for
    guarantee.  The request from the issuer for the SBA
    guarantee must be accompanied  by the applications and
    required statements of the small business  and the qualified
    sponsor  and must include a copy of the certificate or permit
    from  the appropriate pollution regulatory authority that the
    facility when completed for each small business involved,
    will help prevent, reduce, abate, or control noise, air or
    water pollution or contamination.
E.  SBA Commitments:

     When the review and analysis procedures  have been completed
     and SBA determines that all criteria have  been met, a commit-
     ment letter will be issued (usually to the bond issuer) stating
     the requirements necessary for SBA to issue its guarantee.
     Generally, the basic requirements will be that, in addition
     to the information required in the "issuer's Request for
     Guarantee Commitment," the Issuer furnishes SBA v/ith a copy
     of:

                     -6-

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              (1)  The approved qualified contract between the small busine
                  concern and the Issuer-if a lease, a copy of the lease
                  agreement (including ground lease if any).

              (2)  The initial resolution of the Issuer to provide  the financiJ
                  through tax-exempt revenue bonds.

              (3)  The Bond  Counsel's opinion as  to the tax exempt status
                  of the issue.

              (4)  The Bond  Indenture.

              (5)  The Bond  Purchase Agreement.

              (6)  The certification of the named trustee empowering it to
                  act as Trustee

              (7)  The Trust Agreement between the Trustee and the Issuer

         Upon SBA's issuance of its guarantee, the guarantee fee and the
         remainder of the application fee is payable to SBA.

in.  DETERMINATION OF FEES

    A.  Guarantee Fe_e_:

         The statute provides for the establishment of a revolving fund
         into which  all monies, assets  or property received under the
         program are to be deposited,  and  from which all expenses
         and payments on defaults are to be made.  While the language
         of the statute does not require the program to be operated on
         a self-sustaining basis, the legislative history makes reference
         to self-supporting,  and  it is SBA's intent, to the extent practi-
         cable, to operate the program on a self-sustaining basis.

         The law provides for a guarantee fee which may not exceed
         3-1/2% per annum of the minimum annual guaranteed payments
         under a qualified contract.   SBA has determined that the guar-
         antee fee shall be set at the maximum 3-1/2% payable upon
         issuance of the guarantee.  Should experience indicate that a
         change is necessary, adjustments may be considered at a later
         date.
    B.  Processing and Administrative Fees: '•

         The law also permits SBA to fix a uniform fee for processing
         and administrative expenses in connection with the applications
         for guarantee under this program. Accordingly, SBA has
         determined that the processing fee will be charged in accordance
         with the following schedule:


                           - 7 -

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          Amount of Contract              Base              Additional
          Payments  Guaranteed            Fee                   Fee

          Up to $500,000                   $1,000                 	

          $500,001 to $1,000, 000           $1,000   +  . 002 of above $500, 000

          $1,000, 001 to $2, 500, 000        $2,000   +  . 0015 of  above  $1, 000, OOC

          Over 2,500,00                   $4,250   +  . 001 of above $2,500,000

          Each small business  application submitted to SBA shall be
          accompanied by $500 of the above fee, which is not refundable.
          The remainder of the fee is payable upon request for the
          issuance of the guarantee.

IV. LOSS MITIGATION

    A.  Statutory Provisions:

        Section 404(d) of the statute contains certain elements  for
        minimizing the financial risk assumed by SBA under its
        guarantee.  Sections 404(d)(l) and (c) provide for an escrow
        deposit (to be paid by the borrower) of up to 1/4 of the
        average annual guaranteed payments and requires further
        that these escrow deposits be utilized for the period such
        funds are available, to make...  "reasonable  and diligent
        efforts to eliminate or minimze losses...."

        Section 404(d)(3) provides that any guarantor of the qualified
        contract will be a successor to the obligor to collect any pay-
        ments in  arrears from the defaulting borrower.

        Section 404(d)(4) permits the establishment by SBA of any
        other provisions it deems necessary for loss mitigation.

        Section 404(d)(3) requires SBA to determine that there exists
        a reasonable expectation that the  smrll business concern will
        perform the convenants and conditions of the qualified  contract.


    B.  Compliance with the Statute:

        1. SBA will require the small business to make a payment, into
           a escrow account., in an amount equal to 1/4 of the average
           annual guaranteed payments.   This escrow will be held  by
           the trustee under the industrial revenue  bond financing,
           or by a designated depository if the financing is  obtained
           otherwise.  The escz'ow payments may be left  on deposit or
                               E-9

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    invested in securities which are acceptable to the SBA.  In
    the event of default,  the escrow deposit and interest earned
    thereon will be utilized by the trustee to make those payments
    which are in default and this amount shall be totally exhausted
    before a claim may be filed with SBA.   If no defaults occurs,
    the escrow deposit plus  interest thereon shall be used to make
    the final payments under the qualified contract.

    The guarantee agreement specifies that upon payment of a claim
    by the SBA, the trustee  will provide SBA with appropriate
    documents which effectively transfer to SBA the trustee's
    right to legally pursue the defaulting small business for the
    amount of the claim paid.

2.  Other requirements necessary to minimize loss, which are a
    part of the guarantee agreement and/or the qualified  contract,
    are:

      (a)   The trustee must file written notice of default by the
      borrower within the time required in the qualified contract
      simultaneously to the borrower and the SBA.

      (b) That upon receipt of the notice of default,  SBA
      either directly or through the qualified sponsor (usually
      the lender  of account) would make an evaluation of the
      situation to determine the likelihood of a resumption
      of payments by the borrower.

      (c) That if. the loan is not brought current within.
      the time prescribed in the underlying qualified contract,
      the trustee  shall take appropriate action to secure pos-
      session of  the property and/or any collateral provided
      under the contract, unless advised in writing by SBA to
      forego such action.

      (d) That the trustee shall be required:

            a. to provide possession of the repossessed property tol
               to the SBA,  and

            b. to accept any successor business as obligee.

      (e) That the SBA may, in specific situations,  determine that
          in order to minimize loss, the small business should
          maintain possession of the property.  In those situations,
          the SBA may instruct the trustee to forego any action to
          the trustee onbehalf of the small business.
                    -9-
                    E-1G

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(f)  That the trustee shall tnko prompt action against any
guarantors of the underlying obligation lo insure that the
borrower's obligation is brought current or fully satisfied.

(g)  That claims for defaulted payments, which become due
after the escrow funds and/or reserve funds (if any) are
exhausted, will be paid by SBA when all the above require-
ments have been complied with.  (If evidence that a failure
to comply is not the fault of the trustee, SBA may extend
the  period for ccompliance and pay the garanteed payments
as they become due).

(h)  That the small business is required to furnish audited
annual financial statements (for the full period of the SBA
guarantee) to the qualified sponsor which shall prepare a
summary analysis of the statements and the analysis will
be forwarded to the  SBA within sixty (50) days of receipt
by the qualified sponsor.
               -10-
               E-ll

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            APPLICATION FOR POLLUTION CONTROL FINANCING GUARANTEE
                          PART I - SMALL BUSINESS CONCERN

T.  TWO copies of Part I of TTiis application signed by the Applicant along with TWO oT~e
    of the documents and exhibits  required in Section 9 must be submitted.  Omissioi  oi
    any item will result in delay of processing until the item is received.  (Use sepa:  ii<
    sheets if more space is needed. )	

2.   Applicant:

    Name:                                                          	
    Address:
    City:	County:	State:__	Zip Code:	  _

    Employer I. D.  No. (IRS No. )            SIC No. (s):
    No. of employees:	  ( ) Corporation   ( ) Partnership   ( ) Proprietc  si

    Veteran:         Franchise:      Women Principals:   Minority:
    ( ) Yes ( ) No     ( ) Yes  ( ) No   (  ) Yes ( ) No       (specify)   	
    Outstanding SBA Loans:  ( ) Yes ( ) No  (if yes, give Loan Number (s)


3.  Guarantor (s), (if any)

    Name:                                          _______	    	
    Address:
   City:  r	 County:	State:	Zip Code:.
    Relationship to applicant (Relative, stockholder, affiliate, etc. )
 4.  Qualified Sponsor:
    • Name:                                    Address:
     City:  	County:	State:         Zip Code:
5.  References of Applicant (First Name,  Position and Address):

    a.  Banking (indicate name of contact  officer)



    b.  Business Suppliers (3 largest accounts)
    c.  Ma'jor Customers (3 largest. Show % of gross business obtained from each)

                                    E-12

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'5.  Has Applicant ever been a recipient of funds obtained through tax exempt or taxubl
    revenue bonds for pollution control financing?

    O Yes   ( )  No  (if "ye^" S^vc details on sepnrate sheet.)
Y .   Project and Financing Information:

     a.  Type of Pollution Control to be financed:
         { ) Air    (  ) Water    ( ) Air/Water    (  )  Noise   (  )  Solid Waste

     b.  Anticipated Starting Date ____ Estimated Completion Date
     c.  Estimated Cost of:                          d.  Estimated annual operating an
                                                       maintenance costs of the facil
                                                       equipment  $
     Construction            $
                                                    e.  Requested repayment terms:
     Installation             $
     Materials &. Equipment  $
                                                    f.  Estimated useful life of the
     Other costs:  (list)       $                         faciliiy/equipment	
     Total Principal
 8.  Non-refundable Application Charge Deposit of: $ 500. 00  is enclosed; remainder
    payable'upon request for issuance of the SEA guarantc:eT
 9,  The following applicable documents and exhibits are enclosed (TWO copies of eacl

    [  ] a.   Financial Statements for the past three (3) fiscal years (audited if the
           requested  guarantee is $500, 000 or greater).

    [  ] b.   Interim Financial Statements no more than ninety (90) days old.

    [  ] c.   A brief history of the  applicant small buiness, including  type of business,
           date established,  ownership, affiliates,  number of employees and the
           background and experience of key management personnel.

    [  ] d.   Proforma  financial  statements  after giving effect to the financing applied fc

    [  ] e.   Financial data on all affiliates.

    f  J f.  Current personal Balance Sheet(s) of proposed individual guarantors(s).

    [  ] g.   Financial Statements on proposed corporate  or affiliate guarantor(s) for th
           past three (3) years, also indicate relationship, if any, to  applicant.
                                   E-13

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9. Continued..

    [ ] h.  Copy of an appraisal of the value of other collateral tendered as additional
           security for the financing (including the cxistance and amount of outstanding
           liens thereon).

     [ ] i.  SBA Form 912 on officers, 20% or greater stockholders, partners, proprieto

    [ ] j.  Copy of bid proposals or esitmates including plans and specifications lor all
           construction/installation sork,  and cost of materials and equipment connecte-
           with the project.

    [ ] k.  Evidence from the state or federal authority of the need for the  facility,
           including type of pollution to be controlled.

    [ ] 1.  Description of the facility's compliance with standards and regulations,
           including emission and discharge levels.

    [ ] m.  Copy of an opinion from the consulting engineer/architecht responsible for tm
           design, that the the facility, when, completed,  will meet the required pollution
           control standards and regulations.


 10.  AGREEMENT OF NONEMPLOYMENT OF SBA PERSONNEL
      In  consideration of the issuances of the guarantee applied for in this application,
      applicant hereby agrees that for a period of 2 years after the effective date of the
      the guarantee,  applicant will not employ, or tender any office or employment to,
      or retain for professional services,  any person who, on the effective date of sucl
      guarantee or within one year prior to such date, (a) shall have served as an officer
      attorney, agent, or employee of SDA and (b) as such, shall have occupied a posit1^
      or engaged in activities which SBA shall have determined, or may determine,  to
      involve discretion with respect to tnc granting of assistance under any laws admin-
      istered by Small Business Administration or said laws as may be amended from.
      time to time.


11.   The undersigned applicant agrees that this application is made pursuant to Title
      IV of the Small Business Investment Act of 1958,  as amended, 15 U.S. C. 694-1
      arid Title 13, Part 111, Code of Federal Regulations and that the cited law and
      regulations  shall  control transactions between the  Small Administration and the
      applicant, and certifies that:
         a.  All information conntained in this application and in the documents attached
      are true and correct to the best knowledge of the applicant and are submitted
      for the purpose of inducing SBA to guarantee the payments set forth in the
      qualified contract for pollution control facilities.
        b.  No employee  of the  SBA or any member of SBA advisory board who are
      related by blood,  marriage or adoption, have or have had any past, direct or
      indirect, financial interest in or in  association with, the applicant, or any of
      its partners, officers, directors or principal  stockholders (such interest to
      include any direct or indirect financial interest in any other business entity
      or enterprise).

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12. STANDARDS FOR AUDITED AND UNAUDITED FINANCIAL STATEMENTS:

    Financial Statements include three basic statements: Balance  Siicct, Income
    Statement,  and Statement of Chnntre in Financial Position.  The statements are
    to be prepared in accordance with Generally Accepted Accounting Principles
    adopted by the Financial Accounting Standards Board (FASB), and adequate
    footnote disclosure  so as to make the statements not misleading is required.

    When audited statements are required,  such audits are  to be made by an indepcnd-
    ant auditor  in accordance with Generally Accepted Accounting Standards.
13.

Signature (Applicant):	Date;

Title:
    Whoever makes any statement knowing it to be false for the purpose of obtaining
    for himself or for any applicant any guarantee or for the purpose of influencing
    in any way the action of SBA, or for the purpose of obtaining a guarantee under
    the Small Business Investment  Act, as amended, shall be punishable under Section
    16{a) of the Small Business Act, as amended by a fine of not more than $5, 000
    or by imprisonment for not more than tvo yecirs, or both.
                                    E-15

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                                Pollution Control Financing
                        Issuer's Request for Guarantee Commitment
 1.  Issuer (Authority issuing the bonds):

    Name:
    ADDRESS:

    City:
County
State
Zip Code
    Pollution Regulatory Authority:   ( )  Air
        ( ) Other Identify
                    ( )  Water
              ( ) Financing
    .Contact Person:
        Title
       Phone No.
2. 'Estimated Aggregate Amount of Requested Guarantee: $_

-3.  Estimated Net Interest Cost: 	

4.  Estimated Maturity Schedule:
                            % Per annum.
 5.  Name and Address of Trustee: (required prior to issuance of guarantee).

    Name:                                Address:

    City:
   State:
     Zip Code:
 6.  Name and Address of Underwriter:  (required prior to issuance of guarantee)

    Name:	Address:

    City:
    State
       Zip Code:
7. A copy of the following is attached:
 t
( ) The certificate or permit from the appropriate pollution regulatory authority that ti
   facility when completed, and/or the equipment when installed for each applicant srnaTI
   business concern, will meet the required pollution control standards and regulations..

( ) A summary, including the name type of contract (lease or purchase) and the estimate
   amount of requested guarantee and repayment terms for each applicant small business

( ) The resolution of the Pollution Control Authority to provide me financing through
   tax-exempt revenue bonds.
Signature:
         Title:
           Date:
                                     E-16

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                               Part II - QUALIFIED SPONSOR
 1.  Qualified Sponsor:

    Name:
    Address:
    City:	                State:	Zip Code:
    Case Officer!  Name:                          ~   "
    Title:                             Phone No.
2.  Applicant (Small Business Concern)

    Nam e :
   'Address:                                   City:
    County:	    ^ip Code:
3.  Two copies of the following are enclosed:

    [j a.  Opinion that the  applicant business and its affiliates meet the size
          standards set forth in Section 121. 3-11  of the SBA Rules and Regulations.

    [] b.  Copy of a summary review of the  financial statements of the applicant small
          business for the last three (3) fiscal years and the interim period (not more
          than 90 days old).

    [] c.  Copy of up-to-date credit reports on the applicant small  business and all
          affiliates (not older than 60 days from date of submission).

    [] d.  Statement of Judgment (signed by  two officers, including one senior
          officer),  regarding the applicant's creditv/orthiness for the financing
          requested,  including an analysis made  in accordance with the credit
          criteria established by SBA.

     [] e.  Statement of opinion as  to the financial or operational disadvantage to the
          small business applicant.


4.   The undersigned certifies that the information furnished by the Small Business
     Concern (Part I, item 9, sections a through h, ) named in item 2 of this Part II is
     and shall remain on file and shall  be  open at all times to reveiw and/or audit by
     the Small Business Administration.

Note:  (During the pilot program copy of all supporting date  shall be forwarded to SBA).


5.

Signature:	   Title:		  Date:	
                                         E-17

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                                                    APPENDIX  F
                                                                                             Form Approved; OMB No. 41-R2098
FORM ED-201         U.S. DEPARTMENT OF COMMERCE
(REV. 7-71)
ECONOMIC DEVELOPMENT ADMINISTRATION
    APPLICATION  FOR COMMERCIAL OR  INDUSTRIAL LOAN

             (Under Section 202 of Public  Low 89-136)
                                                                                   FOR  GOVERNMENT USFONLY
                                                        Project number
                                                                       State
                                                        Redevelopment area
Name and address of applicant (Street,  city,  county, state and zip code)
                                                                       Date received
                                                                       Amount of loan requested


                                                                       $
Telephone No.	
Communicate with Mr. _
                         Area Code .
                                                                       Maturity requested
 1. PROPOSED PROJECT
   o. Location (£1 other than above) (Street, City, County, and State)
   b. This is a (Check one)


       [   | Completely new business


       Q^j Branch facility of an existing business
                                            ["	] Expansion of existing facility at the site


                                            |   | Restoration of facility destroyed or damaged by fire, etc.
   c. Principal products or services
2. BUSINESS
                                             Date Established
   a. Subsidiaries and Affiliates - List on an attached sheet the names and addresses of all subsidiaries  or affiliates.

   b. Dual Interests - Have the partners, incorporates or shareholders of applicant_any financial interest  in (1) Vendors of project
     items or (2) are they prospective customers of applicant's production?      [_J Yes        PH No

     If "yes," give details.
   c.  Receivership - Bankruptcy- Has applicant or any officer of the applicant or affiliates or any other
      concern with which such officer has been connected ever been in receivership or adjudicated a
      bankrupt.  (It "yes," give names and details on sever at e  sheet)	   [  j Yes
3. COST OF PROJECT (Do nof include working eopifofj
   For the purchase or acquisition of:
   a.  Land (Attach plat)
   b.  Buildings (Attach plan and cost estimates)
   C. Machinery and equipment (Attach itemized separate schedule and cost estimates)
   d. Other (Itemize) (Exclude organizational and promotional fees)
   e. Contingency
   f.        Total
                                                                                                        U5COMM-DC 59090-P7Z
                                                            F-l

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4. PROPOSED FINANCING
0. I PA (Maximum 65%)
b. Hanks
C. Other pru ate (Insurance
Conipuiy, etc.)
Subordinate funefs:
d. Sfatc or local development
Pig an 1 Cation (Minimum 5%)
% of project Terms
cost Years

Name and address
Name and address
Name and address
e. Equity's contribution or loan (/Von-Government source)
f. Other
9- Total aggregate cost (Should agree with Total of Item 3) 100%
4. WORKING CAPITAL (Please cover
Interest
S





s
fu/fy in on affachmenfj
a. Borrowers funds
b. Loans ([ndi ca t& source)
c. Other sources
Total
$


$
APPLICANT SHOULD IMMEDIATELY NOTIFY EDA OF ANY CHANGE IN OR ADDITION TO THE INFORMATION ABOVE.
6- AS ADDITIONAL SECURITY, PAYMENT OF THE LOAN WILL BE GUARANTEED BY
Name and address of guarantors Net worth outside
(Lo ch principal must submit a signed personal balan ce sh set a s of the same date as the orincecSCln
applicant's balance sheet) applicant company
S
6. WHAT WERE THE RESULTS OF EFFORTS'TO OBTAIN OTHER FINANCING?
Name baqks or other institutions, give dates, amount and terms of loans applied for, and results, including any alternative
financing tc.rms offered. Attach copies of banks or other decline letters evidencing such efforts.
8. OTHER FEDERAL ASSISTANCE. Are you requesting or receiving assistance from the Federal
Government for a project which is similar to the one for which assistance is requested in this
(If t'Yt'S," pro vide the rtamc(s) of the other A gen cy(ies) and pro f act nitmber(s) as a separate
attachment.)
n Yes cu NO
FORM EO-2"^ 'PF.V. 7-71)
                                                                                                        USCOMM-DC 59090.plZ
                                                           F-2

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9. EMPLOYMENT AND OTHER ECONOMIC EFFECTS
NOTE: It is the intent of the Economic Development Act to assist redevelopment areas by the: devel
ne« ,ind existing facilities to create new long-term employment opportunities.
A rc-.ihstic projection of employment is necessary to the planning of a business as well as for EDA's
ect. The applicant should include an exhibit with a complete manning table, showing employment by
Subsequent to start of facility operation, information on actual employment will be requested.
o. Current and Projected Employment:
NOTE: Under columns 1, 2, and 3,
the past 12 months. Under columns
Average per month line or total per
in for columns 7, 8, and 9.
Month /\ ear
Jan. 197
Feb. 197
Mar. 197
Apr. 197
May 19"
June 197
July 197
Auj?.19~
Sep. 19"
Oct. 197
Nov. 197
Dec. 197
Average per month
Total per year
Potential net gain
upment and expansion of
evaluation of the proj-
sex and rates of pay.
monthly entries must be completed if the facility has been operational at any time during
7, 8, and 9, monthly entries are required only if the facility will be seasonal in operation.
year line must be filled m for columns 1 through 9- Potential net gain line nvust be filled
Existing jobs, if any
Employment in past 12 months
Number
Male
(1)













••••'•; r"
'• '' ;Y~~"?
Female
(2)














..„..,.
Payroll ($
omit cents)
(3)
s











'•"'"' '• . •. • '
$
* * "
Anticipated jobs
At start of operations
Number
Male
(4)















b. How soon after start of operations will facility be fully operati
Female
(5)














_.-
:maP.

Payroll (5
omit cents)
(6)
* '.

' . . >•









S

*


When fully operational
Number
Male
(7)















Female
(8)















Years
Payroll ($
omit cents)
(9)
$












&
$ (A nnuat)
Months
c. When facility is fully operational:
(1) Industrial
Maximum number of units of
production
Number of shifts
(2)
Commercial
Projected dollar amount of sales
(3)
Recreational
Maximum no. of customer days
accommodated
D. Directly related employment anticipated to be generated by this project. (New, or saved, permanent full-time or full-time equiva-
lent ;obs - other than those in the facility which receives or directly benefits from EDA assistance - that can be specifically
identified as being dependent for their existence on (he EDA assisted facility. This includes loggers and truckers required to
supply a new sawmill, increased number of employees of suppliers of raw materials, tourism auxiliary employment, etc. Such
employment must be in the redevelopment area or in a redevelopment area immediately contiguous thereto.) Describe the cate-
gories or types of jobs which would be effected by the EDA assisted facility, and the number in each category or type. If this
employment represents an increase on the number of existing jobs, show also the number of jobs which existed at time of project
applic uion.
e. Hill operation of this facility result
operated bv the applicant or its faci
f. IJen: if teat ion number used for this
. nl th

FORM EO-201 IREV. 7-71)

in a reduction of emplo% merit in other facilities now
licies' 	 ' 	 [~~lYes C No
company on Employers Quarterly Federal "lax Return (U.S. Treasury Department 941)
IS number does not exist at time of application, it will be provided upon availability.)
Page 3
F-3
USCOMM-DC 55090-P72

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Oa. MANAGEMENT - Names of all officers, directors or partners and their annual compensation, including salaries, bonuses, fees,
v. irhJr.i \\ als, etc. (complete a!l columns).
Name

Annual
compensation

Office held

Percent
ownership

Net worth
outside of applicant

Insurance c .\rried
for benefit of appl.

 b. Attach personal history sheet (Supplement 1) giving personal histories of key officers and employees of the company, each'
    director and each holder of 20% or more of the applicant's voting stock, andeach  officer, partner  or proprietor of applicant.
    Marital Status - If not a corporation, give name of spouse for each married partner or owner.
11. NAMES OF ATTORNEYS, ACCOUNTANTS, AND OTHER PARTIES. The names of ail attorneys, accountants, appraisers, agents,
   and all other parties (whether individuals, partnerships, associations or corporations) engaged by or on behalf of the applicant
   (whether on a salary, retainer or fee basis and regardless of the amount of compensation) for the purpose of rendering profes-
   sional or other services of any nature whatever to applicant, in connection with the preparation or presentation of this applica-
   tion or with any  loan to applicant which  EDA may make, or in which EDA may participate, as a result  of this application, or
   such loan or participation; and all fees or other charges or compensation paid or to be paid therefor or for any purpose in con-
   nection  with this application whether in  money or other property of any kind  whatever, by or for the account of the applicant,  to-
   gether with  a description of such services rendered or to be rendered, are as  follows:
Name and address

Description of services
rendered and to be rendered

*Total compensation
agreed to be paid

*Compensatfon
already paid

 *Subject to EDA approval.  Compensation contingent upon loan approval is not allowed.  In the  event of loan approval, EDA forms
  setting forrh details of services performed or to be performed, must be executed by applicant and the parties, if any, listed above.
 IT IS NOT REQUIRED THAT AN APPLICANT EMPLOY REPRESENTATIVES IN ORDER TO FILE A LOAN APPLICATION WITH EDA.
12. AGREEMENT OF  NONEMPLOYMENT OF EDA PERSONNEL.  In consideration of the making by EDA to applicant 6f all or
    any part of the loan applied for in this proposal, applicant hereby agrees with  EDA, that applicant will not? for a period of two
    years after disbursement by EDA to applicant of said loan, or any p,art thereof, employ or tender any office or employment: to,
    or retain for professional services, any person who, on the date of such disbursement, or within one year prior to said dace,
    (a) shall have served as an officer, attorney, agent, or employee of EDA and (b) as such, shall have occupied a position or
    engaged in activities which EDA shall have determined, or may determine, involve discretion with  respect to the granting of
    assistance under the Economic Development Administration, or said  Act as it  may be amended from time to time.
13. DISCLOSURE OF ANY FAMILY  RELATIONSHIP OR FINANCIAL INTEREST OF ANY EDA EMPLOYEE.  List below the
    names of any EDA employees or advisory board members who are related by blood, marriage or adoption to,  or who have any
    present or have had any past, direct or indirect, financial interest in or  in association with, the applicant, or any of its part-
    ners, officers, directors or principal stockholders (such interest to include any direct or indirect financial interest m any other
    business entity or enterprise):
                       Name and address
                    Details of relationship or interest
FORM ED-201  (REV, 7-71)
Page  4

F-4
                                                                                                            USCOMM-DC 53030-P72

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 14. CERTIFICATION.  I hereby certify that:

    (a) 7 he Applicant has not paid or incurred any obligation to pay, directly or indirectly, any fee or other compensation for ob-
        taining the loan  hereby applied for.

    (b) All information contained above and  in exhibits attached hereto are true and complete to the best knowledge and belief of
        the applicant and are  submitted for the purpose of inducing EDA to make a loan or to participate in a loan by a bank or
        other lending institution, to applicant. Whether or not the loan herein applied for  is approved, applicant agrees  to pay or
        reimburse  EDA for the cost of any surveys, title or mortgage examinations,  appraisals, etc., performed by non-EDA person-
        nel with consent of applicant,

        (tt'hoever makes  any statement, knowing it to be false, on an application for Financial Assistance under the Economic De-
        velopment Administration is subject  to a maximum fine of $10,000 and/or imprisonment of up to five years.)

    MOTE - EDA  is authorized to disclose any information contained in the application and supporting documents to outside con-
    sultants  or private lenders on a confidential basis.
                                                                       (Individual, general partner, trade name or corporation)
 Corporate Seal                                                 By.
  Attest	Title
                            (Title)
 15. CERTIFICATE OF APPROVAL - The undersigned certify that they are officers of an instrumentality of the state or political
     subdivision in which the project proposed in the foregoing request is to be located and are directly concerned with the problems
     of economic development in said state or subdivision; that they  have considered  the qualifications of the  applicant in the fore-
     going request and do for the purpose of qualifying with the requirements of the Economic Development Act approve said appli-
     cant; that they have carefully considered the project proposed and in accordance with the provisions of the Economic  Develop-
     ment Act do hereby find that said project is consistent with the  approved overall  program for the economic development of the
     area and that it is not prohibited by the laws of the state or local political subdivision in which it is  to be located.
                          (Local Agency)                                             (State Agency)
 By	      By.
 Title	Title.
  Date	Date
  Note:  A < '_rtificate of Non-Relocation and a Certificate of Compliance (Civil Rights  Act 196-i ) must be filed with application.
FOP'/ FE-211  (REV. 7-711                                     KlfrC 5                                          HSCOMM-DC 50090-P72
                                                             F-5

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                        INSTRUCTIONS FOR GUIDANCE OF APPLICANTS IN PREPARING
                                  AN EDA LOAN APPLICATION (FORM ED-201)

The information requited by this loan application is the minimum necessary for proper evaluation and is similar to that re-
quired by moot private banks not having previous knowledge of the applicant. These minimum requirements may be supple-
mented by any additional  data which would be of mutual benefit to the applicant and EDA.  If additional space is required
for completion of the information requested in the application, or additional data the applicant desires to  submit, supple-
mental  attachments should be prepared  and submitted in the same number of copies as the application.  Do not condense
the information furnished  at the expense of clarity.
It is recommended that the applicant make full use of the EDA Economic Development Representative for such assistance
as may be necessary to complete the application. Administrative, financial and engineering personnel can be  made avail-
able in case of need.  It is not necessary for the applicant to incur the expense of employing outside agents to prepare
this  application.  Applicant should immediately notify EDA of any change in or addition to the information set forth in this
application.
A more detailed explanation of the requirements of this application follows:

Item  3 - Cost of Project - Cost of Project relates solely to the  acquisition cost of fixed  assets and should not include
organizational, promotional or other expense in the development of the project.

Item  5 - Working capital . Working Capital sufficient  to carry operations  into profitable production will be required but is
not to be included in project cost.

Item  6 • Guarantees - Where applicants  make a relatively small contribution to the cost of a project, EDA may  require the
individual or corporate principals personally to guarantee repayment of the loan.

Item  9 • Employment • EDA is required  to realistically assess the benefits of a proposed project to the area in which it is
located.  The form is designed to cover projects of varying types: seasonal; recreational; commercial and industrial. A
complete manning table, showing employment by sex and rates of pay, planned for the facility when fully operational, is
required.
                                                     Page 6
 FORM ED-201 (REV. 7-71)                                                                          USCOMM-DC 59090-P72


                                                     F-6

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                                                     APPENDIX G

                                  UNITED STATES DEPARTMENT OF AGRICULTURE
  Form FHA -400-1
  (Rev. 6~?6-72)                           FARMERS  HOME ADMINISTRATION

                                      EQUAL  OPPORTUNITY AGREEMENT

   This  agreement, dated	_	between


 (herein  called "Recipient" whether one  or  more) and  the  Farmers Home  Administration,  United  States  Department of
 Agriculture, pursuant to the rules  and  regulations of the Secretary of Labor (herein called the 'Secretary') issued under the
 authority of Executive Orde; 11246, as amended, witnesseth:
I   In consideration of  financial assistance (whether by  a loan, grant,  loan  guaranty, or other form  of financial assistance)
'made or to be made by the Farmers  Home Administration to Recipient, Recipient hereby agrees, if the cash cost of construction
 work performed by Recipient or a construction contract  financed  with  such  financial assistance exceeds  510,000—unless
(exempted by rules, regulations or orders of the Secretary  of Labor issued persuant to Section 204 of Executive Order 11246 of
September 24, 1965.
   1. To incorporate or cause to  be incorporated into any contract for construction  work,  or modification thereof, subject
 to the relevant rules,  regulations, and orders of the Secretary  or  of any prior  authority that remain in effect,  which is paid
 for in whole or in part with the aid of such financial assistance, the following "Equal Opportunity Clause":
      During the performance of this contract,  the contractor agrees as follows:
      (a) The contractor  will not discriminate against  any  employee or applicant  for employment because  of race, color,
          religion, sex or  national origin.  The contractor will take affirmative action to ensure that applicants are employed,
          and  that  employees are treated during employment, without regard to their race, color, religion, sex  or national
          origin.  Such action shall include, but not be limited, to the following:  employment, upgrading, demotion or transfer;
          recruitment  or  recruitment advertising;  layoff  or termination; rates  of pay or other forms of compensation; and
          selection for training, including apprenticeship.  The contractor agrees to post in conspicuous  places, available
          to employees and applicants for employment, notices  to  be provided  by the Farmers Home Administration setting
          forth the provisions of this  nondiscrimination clause.
      (b) The contractor will, in all solicitations or advertisements for employees placed by or on behalf  of the contractor,
          &tate that all qualified applicants will receive  consideration for employment without regard  to race,  color,  religion,
          sex or national origin.
      (c) The contractor will send to each labor union or representative of workers with which  he has a collective bargaining
          agreement  or other  contract or understanding, a  notice, to  be provided by the Farmers Home Administration,
          advising the  said labor  union or workers' representative  of the contractor's commitments  under this  agreement as
          required pursuant to section  202(3)- of Executive Order 11246 of September 24, 1965, and shall post  copies of the
          notice in conspicuous places  available to employees and applicants  for employment.
      (d) The contractor will  comply with all provisions of  Executive  Order 11246  of September 24, 1965, and of all rules,
          regulations  and  relevant orders of the Secretary  of  Labor  and  of  any prior authority which  remain in effect.
      (e)  The  contractor will furnish all information and reports required by Executive Order  11246  of September 24, 1965,
          rules, regulations, and orders, or pursuant thereto, and will permit access to his books, records, and accounts by the
          Farmers Home Administration, Office of Equal  Opportunity, U.  S. Department of Agriculture, and the Secretary of
          Labor for purposes of investigation to ascertain compliance with such rules, regulations, and orders.
      (0  In the event of the contractor's noncompliance with the Equal Opportunity (Federally Assisted Construction) clause
          or with any of the said  rules,  regulations, or  orders,  this contract may be cancelled, terminated, or suspended in
          whole or in part and the contractor may be declared ineligible for further Government Contracts or Federally Assisted
          construction contracts in accordance with procedures authorized in Executive Order No. 11246 of September 24, 1965,
          and  such other  sanctions  may  be imposed  and remedies invoked as provided in Executive Order No.  11246 of
          September 24, 1965, or by rule, regulation or order of the Secretary of Labor, or as provided by Law.
      (g)  The  contractor  will include the provisions of this  Equal Opportunity  (Federally Assisted Construction) clause in
          every subcontract or purchase order, unless exempted by the rules, regulations, or orders of the Secretary of Labor
          issued pursuant  to Section 204 of Executive Order No. 11246 of September  24, 1965,  so that such provisions will
          be  binding upon each such  subcontractor or  vendor.   The contractor  will take such action with respect to any
          subcontract or purchase order as the Farmers Home Administration  may direct  as  a means  of enforcing such
          provisions, including sanctions  for noncompliance:  Provided, however, that in the  event  the contractor becomes
          involved in,  or  is threatened with, litigation with a subcontractor or vendor as  a result of such direction by the
          Farmers  Home Administration, the contractor may request the  United States to enter  into such litigation to protect
          the interest of the United States.



                                                       rosttlon  6                           FHA 400-1 (Rev. 6-26-72)
                                                               G-l

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   2.  To  be bound by the provisions of the Equal Opportunity Clause in construction work performed by Recipient and paid
for in whole or in part with the aid of such financial assistance.
   3.  To  notify all  prospective contractors  to file the required 'Compliance Statement',  Form FHA  400-6, with their bids.
   4.  Form AD-425, Instructions to Contractors, will  accompany the notice of award of the contract.
Bid conditions for all nonexempt Federal and Federally assisted construction contracts require inclusion  of the appropriate
"Hometown" or "Imposed" plan affirmative  action and equal employment opportunity requirements.  All bidders must comply
with the bid conditions contained  in the invitation  to be  considered  responsible bidders and hence eligible for the award.
   5.  To  assist and cooperate actively with the Farmers Home Administration and the Secretary in obtaining the compliance
of contractors  and subcontractors with the  provisions of the Equal Opportunity Clause  and  the said rules, regulations, and
orders,  to obtain  and  furnish to the Farmers  Home Administration  and  the  Secretary, Form  AD—560,  Certification of
Nonsegregated  Facilities, to submit the Monthly Manpower Utilization  Report, Optional Form  66, as  required and such other
information  as they may require for  the supervision of  such  compliance, and to otherwise  assist the Farmers Home
Administration in the discharge of its primary responsibility for seci-ring compliance.
   6. To  refrain from entering into  any contract,  or  extension or other modification  of a contract, subject to such Executive
Order with a contractor debarred from Government contracts or federally assisted construction contracts pursuant to Part II,
Subpart D,  of such  Executive Order or to prior  authority;  and to carry out such  sanctions and penalties for violation of the
provisions of the  Equal  Opportunity Clause as  may be  imposed upon contractors and subcontractors by the  Farmers Home
Administration or the Secretary pursuant to such Subpart D.
   7. That  if Recipient fails or refuses  to  comply with  these undertakings, the Farmers Home Administration may take any
or all of the following actions:  (a) cancel, terminate,  or suspend said financial  assistance in whole or in part; (b) refrain
from  extending any further assistance  under the program involved until satisfactory assurance of future compliance has been
received  from  Recipient; and (c)   refer  the case to the Office of Equal  Opportunity, U. S. Department of Agriculture for
Appropriate action.

Witness the due execution hereof by Recipient on this, the date first above written.
                                          Recipient
                                          Recipient
 (CORPORATE SEAL)
 Attest:
Name of Corporate Recipient

By	
                                                                                                             President
                                          Secretary
                                              
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  Form FI1A44')-!
  15-18-73)
I
  F
I
I
                                                         Position 3
                                      UNITED STATES  DEPARTMENT  01   AGRICULTURE
                                           FARMERS  HOME  ADMINISTRATION
                                    APPLICATION FOR LOAN AND GUARANTEE
                                                                                                      I OR\1  APPROVED
                                                                                                      OMB NO. 40-R3868
                                                                                                Employer's 1. D. Number
                                                                                                I HA Case Number
    APPLICANT (Show official name uithout abbreviations unless an abbreviation is a part of the official name  for proprietor or partnership, show
                mined) followed by d/b/a j;id trade name used, if any)
                                                                 Street
Ot>
elcphone Ni>
County
Date of Application
State
Amount of Loan Requested
ZIP Code
Maturity Requested
•
1 ranchise
DYCS
D No
If Yes, Submit Copy
[_J Existing Business
d New Business
Date hmerpmt' Established
    DESCRIPTION 01 JOBS (INCLUDE SUBSIDIARIES AND AFFILIATES)
    Tune of Application  (If There is an Existing Operation)
              Nu;nber
                                                      Occupation or Skill Type
                                                                                                      Average
                                                                                                      Vva^e/rmployec:
                                                                                                   Including 1 rinsie liencfits
t
  TOTVL
i
  f Loan is Approved
[
I
   OTAL
I
I
    ISriM \1T U IAXLS TO BE PAID BY 1'KOJKT
     Income l( (tr
     Payroll
     Lxcise
     Real 1 state
     I ranch nc
     TOT\l
                                                                           TLDERAL
                                                                               XXX
                                                                                              STA1 1
                                                                                                             LOCAL
                                                                                                                 XXX
    LOC X'HO.N 01  PROJECT
I
I
I
                                                               i-ifviicd ( ontutufiitv
                                                  Project .so
                                                 (if avail.'blc)
                                                                        Sponsoring Agency /Location
                                                                                                               Present
                                                                                                               Status.
                                                                G-3

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5.  Use of Proceeds-
   Land A.ctfuisition
   New Building or plant construction
   Deb! Payment
   Working Capital
                                                                  Acquisition and/or repair of
                                                                  machinery and equipment
                                                                 Tofnl
6.  SUMMARY Of- COLLATERAL OFFERED (Attach detailed list of collateral offered - See Item 10 (g) page 3
                                              Cost
                                                                        Net Book Value
                                                                    (Cost Less Depreciation)
                                                                                                           Present Liens Or
                                                                                                       Mortgage Balance, If Any
   Land and Buildings	
   Machinery and equipment..
   Furniture and fixtures	
   Accounts receivable	
   Inventory  ,  	
   Other (s»ecit'y)	
7. AS ADDITIONAL SECURITY, PAYMENT OF THE LOAN WILL BE GUARANTEED BY:
   Name and Address (Include ZIP Code and Social Security Number of Guarantors)
 (Each principal must submit a signed personal balance sheet as of the same date as the applicant's)
   (Form FHA 449-5 may be used.)
                                                                                                     Net Worth Outside Of Interest In
                                                                                                     Applicant Company
    DISCLOSURE OF SPECIAL INFORMATION REGARDING PRINCIPALS: (a) List below the names of any FHA employees who are related b>
    blood, marriage or adoption to, or who have any present or have had any past, direct or indirect, financial interest in or  association with, the
    applicant, or any of its partners,  officers, directors or principal stockholders (such interest to include any direct or indirect financial interest m
    any other business entity  or enterprise): (b) When the proprietor, or any partner, officer, director,  or their spouse, is an employee of the U. S
    Government  (including  members  of the armed forces), detailed information shall be submitted with this application. (Use  separate sheet if
    necessary)
     Check boxes if (a)  or  (b) above is not applicable      (a) |	|               (b) |	|	
        Name and Address  (Include ZIP Code)
                                                                                 Details of Relationship or Interest
                                                                Page 2
                                                                    G-4

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    MAN.\GKMEtyT - Enter (u) names  of all owners, officers,  directors  01  partners and their annual  compensation,
    including salaries, fees, withdrawals, etc. (b) names and compensations of all employees receiving in excess of SI 7,500
    annually, (c) hired manager, and (d) for all  additional   stockholders  having  a  20/£ or more interest in applicant.
    complete' all columns except annual compensation.
Name (List iirst. middle, maiden & last )
(If no middle name, so state)

| Annual
Office Hold Compensation


Percent
Ownership

Personal
Guaranu
Offered'
(Yes or No)

Insurance
Carried for
Benefit of
Applicant *

).   INSTRUCTIONS TO APPLICANT (Attachments):

    Guaranteed Loans - Submit  two copies of this  form and  all "supporting  documents  to  the approved lender. All
    attachments, must be  signed and  dated.

    (a)   Form FHA 4494, Statement  of Personal History  must be submitted in quadruplicate by the proprietor, if a
          sole  pioperietorship, by each partner, if a partnership, by each officer; director, and each additional holder of
          20 percent or more of the voting stock, if a corporation; and other persons, including a hired manager, who have
          authority to speak for and commit the borrower in the management of the business.

    (b)   Attach to application a brief description and history of the business.

    (c)   Comment-briefly on the benefits the business and community will receive if the loan is made.

    (d)   -\tuch a schedule on all installment  debts, contracts, notes and mortgages payable, showing to whom payable.
          original  amount, original date, present  balance, rate  of interest, maturity date, monthly 01 other peiiodic
          payments,  security  and whether current or delinquent. (Amounts on this  schedule  should  agree with  the
          figures on  the applicant's financial statement.) Indicate by an asterick (*), items to be paid by loan proceeds and
          attach statement showing reason for paying same.

    (e)   If construction is involved, state the estimated cost and source of estimate, source of any additional funds which
          may be required to complete the construction, and whether temporary financing for the construction is available.
          Furnish preliminary plans and specifications with the application.  Final  plans and specifications must be submitted
          for Lender approval prior to  commencement of construction if loan guarantee is tentatively approved.


    (f)   \Vhere loan funds will be used for construction purposes,  and the  contract or subcontracts are in  excess of
          S 10.000, the Applicant  must execute and submit with the  application Form FHA 400-1, "F.qual Opportunity
          Agreement" which is a non-discrimination agreement issued pursuant  to Executive Order ! 1 246.

    (g)   A description of collateral is required whether now owned  or to be acquired. Attach Form FHA  449-2.


    (h)   I  DI each person listed  in "Management" give brief description  of education,  technical training, employment
          and business experience.

    (i)   Attjch audited financial statements for the past  3 fiscal years.

    (j)   Attach balance sheet  and income statements dated within 90 days from date of filing application with aging of
          accounts receivable and payable.

    (k)   Rcvo.'icihjtion of net  worth  shall be provided for items (i) and (j) above.
     "Life mvirance on owner(s), pnnupal(s), or key man will bz required ONLY when specifically included a> a condition
      of an approved loan.
                                                    Page 3
                                                            G-5

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      (1)   Furnish earnings projection (estimated profit and  loss statement) for at least three full years together with a
            detailed monthly cash flow  for  the first full year and quarterly cash flow statement  for the next two years.
       (in)  Personal Financial Statements must be submitted for proprietors, each partner, each officer, and each additional
            stockholder with 20% or more ownership.  For this purpose the enclosed FHA Form 449-5 will  be used.

       (n)   Details must be given of any pending  or anticipated litigation, whether applicant be plantiff or defendant or any
            litigation that involves management of the applicant listed in "m" above.

       (o)   Subsidiaries and Affiliates - List on an attached sheet the names and addresses of (1) all concerns that may be
            regarded  as subsidiaries  of the applicant, including  concern m which the applicant holds a controlling (but not
            necessarily a majority)  interest, and (2) all other concerns that are in any way affiliated, by stock ownership,
            management contracts,  or otherwise,  with  the  applicant.  The applicant should comment briefly regarding the
            trade relationship between the applicant and such subsidiaries or affiliates, if any, and if the applicant has no
            subsidiary  or affiliate, a statement to this  effect should be made.  Signed and dated balance sheets, operating
            statements -and reconcilement of net worth must  be  submitted  for all  subsidiaries and  affiliates in the same
            manner as required of applicant.

       (p)   Purchase and sales relations with others - Does applicant buy from, sell to, or use the services of, any concern in
            which an officer, director, large stockholder, or partner, or proprietor of the applicant has a substantial interest?
               I  I  Yes   [_J No   If'"Yes" give names of such officer, directors, stockholders, and partners, and names of
            any such concern on attached sheet.

       (q)   Receivership - Bankruptcy - Has applicant or any officer of the Applicant or affiliates or any other concern with
            which  such officer  has  been connected ever been in receivership 01 adjudicated a bankrupt?  [	( Yes j_	| No
            If "Yes" give names and details on separate sheet.

       (r)   Previous-Financing - List assistance received, requested, or any pending applications. (Include direct, participation,
            insured, or guarantee loans and grants  from any Federal agency.)
Name of Agency or Department
* If not approved \viite "Declined."
Amount
Requested

Date of
ApprovaK*)

Present
Balance

Status (Current,
Delinquent, Matur-
ity Accelerated,
Liquidated or Paid
in Full)

11-     POLICY AND REGULATIONS CONCERNING REPRESENTATIVES AND THEIR FEES -
       (a)    An applicant for a loan may obtain the assistance of any attorney, engineer, appraiser, or other representative to
             aid it in the preparation of its application, however, such representation is not mandatory. In the event a loan is
             approved, the services of an attorney may be necessary to assist in the preparation of closing documents, title
             examination, etc. Fees or other compensation which FHA considers reasonable for services performed by such
             representatives on behalf of the applicant may be paid from loan proceeds.

       (b)    There  are no "authorized representatives" of FHA. other than our regular salaried employees. Payment of any
             fee or gratuity  to FHA employees is illegal  and will subject  the parties to such a transaction  to prosecution.

       (c)    FHA will not approve  placement or finder's  fees for  the use or attempted use  of  influence in obtaining  or
             trying to obtain a loan, or fees based solely upon  a percentage  of the approved loan or  any part thereof.

       (d)    1 ees which  will  be approved will be limited to reasonable sums for services actually rendered in connection with
             the application or the closing, based upon the time and effort required, and the nature and extent of the services
             rendered by such representative.  Representatives of loan applicants  will be required to execute an agreement as
             to their compensation and services to be rendered in connection with the loan.

       (c)    It is the responsibility of the applicant to set forth in  Section 12 of this application the names of all persons or
             firms engaged by or on behalf of the applicant  Applicants are also required to  advise  FHA in writing of the
             names and  fees  of any  representatives engaged b\ the applicant subsequent to  the  filing of the application
             Failure to so notify FHA constitutes "misrepresentation" and will void FHA's guarantee it lender had knowledge
             of this omission.
                                                        Page 4
                                                             G-6

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       (0    Any  applicant having any question concerning the payment  ol  tees, or the reasonableness of fees, should
             communicate  with  FHA before  the application is  filed  for a loan guarantee.

12.     XAMKS OF ATTORNEYS, ACCOUNTANTS, A\D OTHER  FARTIhS  The names of  all attorneys, accountants,
       appuisers,  agents, and ail other parties (whether individuals, partnerships, associations or corporations) engaged by or
       on behalf of the applicant (whether on a salary, retainer or fee basis and regardless of the amount of compensation) for
       the purpose of rendering professional or other services of any nature whatever to  applicant, in connection with  the
       precaution or presentation of this application  to a lender, and all fees or other charges or compensation paid or to be
       paid therefor or for any purpose in connection with this  application or disbursement of the loan whether in money or
       other property of any kind whatever, by or  for the account of the  applicant,  together with a  description of such
       services rendeied or  to be rendered, are as follows.
       Name and Address (Include ZIP Cods)
                                Description of Services
                              Rendered and to be Rendered
                                                                      Total Compensation
                                                                       Aereed to be Paid*
Compensation
Already Paid*
  13.   AGREEMENT OF NONEMPLOYMENT OF FHA PERSONNEL. In consideration of FHA guaranteeing any part of
       the loan applied for in this application, the applicant hereby agrees with FHA that applicant will not, for a period of
       two years after date of guarantee of any part of the loan, employ or tender any office or employment to, or retain for
       professional services, any person who,  on the  date  of such disbursement, or within one year prior to  said date, (a)
       shall have served as an officer, attorney, agent, or employee of FHA and (b) as such, shall have occupied a position or
       engaged  in activities  which FHA shall  have determined, or may determine, involved  discretion  with respect to the
       granting of assistance under the Consolidated Farm and Rural  Development Act and other Acts administered by FHA
       from time to time.

  14-   CERTIFICATION. The applicant hereby certifies that

       (a)   The Applicant  has read  FHA Policy and Regulations concerning representatives and their  fees (11 above) and
             has not paid or incurred any obligation to pay, directly or indirectly, any fee or other compensation for obtaining
             the loan hereby applied for, other than  for services and expenses authorized pursuant to paragraph 11 above.

       (b)   The applicant has not paid or  incurred any obligation to pay to any Government employee or special Government
             employee any fee, gratuity or  anything  of value  for obtaining  the assistance hereby applied for. ff such  fee,
             gratuity, etc. has  been  solicited by any such employee,  the applicant agrees to report such information to the
             Office of Inspector General, USDA, Washington, D. C.  20250.

       (e)   All information contained above and in  exhibits attached  hereto are true and complete to the best  knowledge
             and belief of the applicant and are submitted for  the purpose of inducing FHA to guarantee a loan by a bank or
             other lender to the applicant. Whether or not  the loan herein applied for is approved, applicant agrees to pay or
             reimburse  the lender  for the  cost of any  surveys, title or mortgage examinations, appraisals, etc., performed by
             nonlender personnel with consent of the applicant.

       (d)   The applicant hereby covenants, promises, agrees and gives  herein the ASSURANCE  that in connection with any
             loan to applicant which FHA  may guarantee as  a result of this application, it will COMPLY with the requirements
             of Executive Order 1 1246 to the extent  that  it is applicable to  such financial  assistance  The applicant further
             agrees that  in the  event it fails  to comply with said applicable provisions. FHA may cancel,  terminate, accelerate
             repayment of or suspend in whole or in part the financial  assistance provided or to be pio\ided by FHA. and that
             FHA or the United States Government may take any other action that may be deemed necessary or appiopnatc
             to effectuate the nondiscnmination requirements, including the  right to seek judicial enforcement of the terms
             of this ASSURANCE OF COMPLIANCE. These requirements prohibit discrimination on the grounds  of  lace.
             religion, color, sex, or national origin by recipients of federal financial assistance,  including but not limited to
             employment practices, and require the submission of appropriate reports and access to books and records. Ihcse
             requirements are applicable to all transferees and successors  in interest.
          1 nte
,'i specific dollar amounts or hourly rates. "Unknown," "Undetermined" 01 other imprecise terms are not sufficient.

                                           PageS

                                               G-7

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                               (Individual, general partner, trade name or corporation)


CORPORATE SEAL                                       B\ 	
                                                         Title.
Attest 	.	.	   Date Signed.
                        (Title)
     Whoever makes any statement knowing it  to be false, or whoever willfully overvalues any security, for the purpose of
     obtaining for himself or for an applicant any loan, or guarantee or extension thereof by renewal, deferment, of action ,
     or otheiwise. or the acceptance, release, or substitution of security therefor, or for the purpose of obtaining money.
     propert>, or anything of value from the United States of America or an agency thereof under the Consolidated Farm
     and Rur.il Development Act. may be subjected to criminal prosecution.
                                                                                       Bank Transit No.
15.    REQUEST FOR CONTRACT OF GUARANTEE
      (For use only by bank or other lender)
     We propose to make and  service a loan to the  Applicant named on page 1  of this Application. We hereby make
     application for a Contract of Guarantee subject  to the provisions of the applicable Lenders Handbook (B & I). We
     understand that the prohibition in  11  (b) of the foregoing application against payment of fees or gratuities and the
     non-employment agreement in paragraph 13 of said application are binding on us.
     (a)  Terms and Conditions of Loan.


          (1)   Term of loan	years.  	payments, including lender's interest at	% per annum,

                in the amount of S	

          (2)  Collateral and lien position.
           (3)  Planned Disbursements
           (4)  Guarantee.
           (5)  Insurance: Life, Hazard, Federal Flood.
          (6)  Other
                                                                    Page 6

                                                          G-8

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     (I))   Comments of the Lender which may be in the form of a letter or memorandum, shall:

           (I)   include an evaluation of ability of Applicant's management, its past record of handling obligations, an
                expression as  to what the  loan  will do for applicant, applicant's repayment ability, and other pertinent
                information.  If  Applicant  or  any of its  officers  have been ajudicated  bankrupt or connected with a
                receivership or been involved in any criminal or other legal proceedings, give details.

           (2)   state whether any officer, director, substantial stockholder, or employee of the Lender has a financial
                interest in Applicant and, if so, the extent thereof.

           (3)   indicate  whether Applicant,  its subsidiaries or affiliates, is/are indebted to the Lender.  If so show the
                amount, terrm, and  how secured, including any guarantee, and whether applicant's loans have  been met
                substantially  as agieed.  (Include all  such  loans made during the past 12 months, showing high and low
                credit  by months. If no loans  were made during the period, so state.)

     (c)   In our opinion, the  loan will be sound and it appears that all FHA requirements in the Lenders Handbook can and
           will be met.
                                                                 Name and address of bank (Include ZIP Code)
Telephone No.

Date	
                                                                              Authorized Officer
                                                                OU. S. GOVERNMENT PRINTING OFFICE:  1975--668526/82  REGION NO. 6
                                                     Page 7

                                                     G-9

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                                     SFATHMHNT  OI  C'OLLATKRAI.
USD-VI I! l j
Appraiser '•
Market Value \



'•



{



                                SUMMARY Oh COl.LMI R \L TO BE ACQUIRED
CLASSIFICAIION
1.
L.'ind Acquisition
2 Nc\\ Buildings or Plant Construction
3.
4
5
6
\> quisition of Maclnneiy and Equipment
Acquisition of Automotive Fqiupment
\i4U!s:tion of Office Furiutuie and Equipment
Oi'u-i
"? 1 n'.ii ("i o Item 10 above)
I \act Cost








X X X X
X X X X
X X X X
X X X X
X X X X
X X X X
X X X X
For Use ot
Appra:>ei
Maiket Vain:







     mi  s
estimated t.i.
above Sin,;,.
 V.SEK CERT1M1 S that he iias personal!)  and
In: of the collateral to be jeq'iired  Furthcmu>r
 i:e fair and reasonable as of that date  -\dditn >
                                                               inspected the tolLueial as listed in llns Rep'n.
                                                                                   the maiki't values S|M •
                                                              ents are attached to this Repor'
                                                       G-in

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                                                 RLAL  tSTA'It  O\\.\hi)
Vimr .111(1 VlUri'xS
ol' AppliL.int
IlK-illd,- ZIP Cod,- . . _.._..

EMPLOYER ID NO.

FHA CASL NL'MBI R

 Parcel nuinhci
Address of  Re.ilu Offered
                                                    I itle data     |	I Title Insurance        [	j Abstract


                                                                  I	I Other (indicate)


                                                    Realu  in name ol	


                                                    Recorded- Book 	  Page  	


                                                    County 	
        Land  and land impiovements (Do not include buildings-see Sec  2 be!o\v) (Land improvements such as paving,
        utilities, fences, etc.)

              	         Date acquired
        Legal description (Attach if too  long)'
   •:  It  available  attjcli plat survev
                                                    Total  Acres
   2.    Buildni.;-, (MiuA square footage of each) Cost (If separate from land) S
                                                                                     Date acquired
Ijtiilduu iL'xciiption.  List ejcl) building separate!)' with hue) iL^cnption
ol sioiK-s  da'c erected, use, and condition
                                                                                    g si^e, type of constuiUion. nunibei
                                                                                              Assessed Value
                                                                                     Impiovemenis


                                                                                     I axes	
   Rent if App: , 'ble   S _

   Can\ "I oi.i|,  LI P,JMO |
  (Siiinni,ii\  i I in .  | ^iij 2
                                           I    Month    [__ j \Mniia!K    [_j I ease

                                                        G-ll
."I 01 m  ol  Lease

-------
     ol  Rc.ilH Ottered
                                        Rl-.AL LSTA1L rO BL ACQUIRED
N.ime
ot
Inclnd

Applicant
- /IP f ,,,|,-

LMl'LOYtR ID NO

I HA ( ASI. M MM R

                                                   "I;;!edJta       I	' Title InsLiiance      L, Abstiac


                                                  	  '	' Other (indicate)
1     I and and land improvements (Do not include buildup - see Sec  2 helms) (Land improvements such as pavnm. iinhlicv
     tcncev water rights, etc )
     l.cjiai desciiption (Attach i!  tuu long)*
  It availabie. attach plat suivcy
                                                    7,itdl -Vies
              (Show iquurc  footage ot each) Cost (11 v:paur_  nom land)  S
Hinidi'is; debLiipti'jn*.  List each building sepai.,i-M\ uit'  Kiel description including

 l  Muiie-.. date elected, use. and condition
                                                                                      /e. tspe "I  coiiitiuclion. nu.nbcr
  iU  it  e \isting building 01 to be


   Applicable   S      .
                                                [   |
Month       Annual!)    [   | I ea-e

-------
PLRSON'AL PROP1 Rl\
( \nd am fixture^ not included uith Real 1 stdic or Duildi/ij; on Paiie -1)
Ill'.-vl plopoilv 	 . . . . 	 	
[I n f ,'(,'ri -t f

! ' U-jNOdl-.
Name of \pplitanl

1 HA C\SI NO

\i>()ii..:ni- u   .'.,!.,-.IP  \('ll,\I  Pinsi!  \I  1\VI N'lOKY Oh  lilt I'l KS()\ \L I'ROl'l R I'Y beinu ofleied a^ colkik-i.i! DO \() I
I \kl  I !\' )M II1 it >K  l\l  l ()R[)S  l.isi caJi ik'in ni .itdM cl.iiin.' \\ ill  'he classi heat ion nunihcis on pace !, o.s
 I M M.K'PII. t  .iiiJ  I quipmenl (4) ,\viioinoti\c  l.qinpinent (5) Oiii^c  furniture and equipment (6) Othei t'oi  example' jigs  tii
lAluroi  .iiiplin^  oil.  (Libt piopertv al dilteien! iooalioiib on separate page-.)
                                                 Model     \uinlvi
                                                                     Ke
                                                                                                        ( oud
                                                                                                                   Maikel
                           111  Si Rl  Mill! MS ( \N  HI  R!
                                                           G-13

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|(And .in
1 )>.- fiill.iv 11. i' il.'M'iihf.l pmpprty
^ , * T ^ - >; ' "1 i >t trfi-i i'(l fit
i *H 1 1 -"1 -1 'ip ' r • ' ' • — i i — i
HUUI ^4 ,
' "jti-ih :> ws .i,ili 	 1 lojscdl 	 1

1,,, ,:,„[• •
i ...
Item Vinu M.iiuil'jcturer-Make







•"
I
•









'








1
•1




_
•






' , 1 ..UK Dl 1 ,iJi ( : ^
CON UN
\ 1 !\IlllL'S III





Dito
\t quired










































"i v.ihi'ii ii
i:.\TIC)\ 01- PI R->(J\
>t included u ith Roal 1 -




|
Model i .Vi.J
1 Niinib.'i
I










































I'.i'je 1
\L PKOI'I \<\\
late 01 liuildnii; uu I',IL\




\ev.
l\ed (OS[
Rebuilt










































h.i.i'i
:>
\anic nl \

1 II \ ( .ise

\1 1
HOOK











































1

ppht_;int

\n

1 Ol 1 'SL1 ()

t t)l)U
















































Appuiis^'i
\Uukot












































G-14

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          PI RSONAL PROP! KTY IO BL ACQU1RI I)
(Am! any lixiiues no! included »nh Real Ksiate 01 Buildmt: on Page 3)
The to!lo\Miu' dcsuiivd pioperty
is to he located 01 hcadqnaiteicd at
Include /ip ^ode i 	 1 t 	 ,
Location is tuMicd ! 	 ! leased! 	 1
n-,*.,f,",r, ,,n
Item Xaii!e-\lji in lac tin ci -Make






Date to
he
Acquired
































i




























Model
Capacity
1

i
i










































































X'esv
Used
Rebuilt




Name of Applicant

HL\(\i>eNo

COST




1
i
Lor Use of Appraiser
C'ond

Market
Value




1
!
















(

















1





















,
i










1
1
i


i






(.'i<\ 1 ot.ils of f Jell ( ljss,'iK\iti



























1




\ X \



(i nt (i
G-15

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USDA-FmHA
Form FmHA 449-4
(Rev. 7-28-75)

      STATEMENT OF PERSONAL HISTORY
                                       FORM APPROVED
                                       OMB NO. 40-R3869

INSTRUCTIONSrThls form  must be completed  by the proprietor
(owner) If the applicant Is » sola proprietorship; or by each general
and each limited partner If the applicant Is a partnership; or by each
officer, director, key employee and stockholder  holder 20 percent
or more of the applicant's voting stock except for those corporations
that are listed on a major slock exchange.

Failure  to  report full,  complete and  accurate  Information may
result In  FmHA's not making  or guaranteeing the loan requested.
Name and address of loan applicant (F-irm name) (Street, City, State
 and Zip code)
Type of business
(Check one)
   I	I Sole owner
   1—I Partnership
                       I	I Private corporation (for profit)

                       I—I Private corporation (non-profit)
                       I—I Public corporation (non-profit)
Emplujur ID Number
1 Personal Statement of. (State name in full, if no middle name,
(NMN), or if initial only, indicate initial)
First Middle Maiden Last
Name of Spouse
2. Marital Status I 1 Married (~j Single {"""] Other

3. a. Place of birth (City and State or foreign country)
b. Date of birth (Month, day, year)
4. Citizen of United States? ( — I I — I
LJ Yes LJ No
5. Social Security No.
6. a. Relationship to Applicant.
b. Give the percentage of ownership or stock owned or to be
owned in the applicant.
7.  Are you presently under indictment, on parole or probation?  if yes furnish details on a separate sheet.
                                     D
                                         Yes
DN°
8.  HJVC >ou ever been charged with or arrested or convicted of any criminal offense other than a minor motor
    vehicle violation?     If yes, furnish details on a separate sheet
                                     D Yes   DNo
   Stalling with present address, list residence addresses during the last ten years.
    Djte                   Street and number                    City
                                     State
10. Starting with present employer list all employers during last ten years

    From                          To                            Employer
                                    Address
The infor,nation on this form will be used in connection with an investigation of your character.  Any information you wish to submit,
which you feel will expedite this investigation, should be set forth below and on the back of this form, if needed.
Date
                          Title
                                                                        Signature
      uiT, 19/T-0-665-664/1720
                                                                                               FmHA 449-4 (Rev. 7-28-75)
                                                               G-16

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                                                           Position  3
  'SDA-F11A
 FormFHA 44<>-S
          ?} RSONAL FINANCIAL STATEMENT
                                               19
                                                                                                          FORM APPROVED
                                                                                                          OMB NO. 40-R3870
                                                                  INSTRUCTIONS: This form must be completed by the proprietor
                                                                  fowner) if the applicant is a sole proprietorship, or by each general and
                                                                |  each limited partner if the applicant is a partnership, 01 by each officer,
                                                                ,  each director, each key employee, and each stockholder holding 20* or
                                                                !  more of applicant's voting stock, if the applicant is a corporation.
sme and 
of loan applicant (1 inn name) (Street, Citv , S'ate id Zip codel Employer ID Number Name and Address, Including ZIP Code (of person and spouse bmitting Statement; Jiancial Institutions and Account Numbers of person submitting statement T> pe of business . — , (Check one) | 1 1 Sole owner L_ 1 1 Partnership 1 ' 1 Other fF.xpl.un) Business (ot person submitting Stat<- Private corporation (for profit) Private corporation (non-profit) Public corporation (non-profit) merit) Social Security No (of person submitting Statement) Relationship to Applicant Please answer all questions using ''No'' or ''None" where necessary ASSETS LIABILITIES r-ish on Hand & In Banks $ . .vings Account in Banks "F S. Government Bonds Accounts & Notes Receivable Ke Insurance-Cash Surrender Value Onl)Z_ her Stocks and Bonds (From Sec. 3) — Real Estate (From Sec. 4) _ (tomobile - Present Value :ier Personal Property (from Sec. 5) Utner Assets (From See 6) Accounts Payable S . Notes Payable to Banks (From Sec. 2) — Notes Payable to Others (From Sec. 2) — Installment Acct. (Auto,) (Pymt S ) — Installment Acct (Other) (Pymt. S ) _ Loans on Life Insurance — Mortgages on Real Estate (From Sec. 4) — I npaid Taxes (From Section 7) Other Liabilities (From Section 8) — Total Liabilities — I Total Assets S- Net Worth _ Total Liabilities & Net Worth S- Section 1. Source of Income (Describe below all items listed in this Section) CONTINGENT LIABILITIES I t Investment Income. . Real Estate Income Income (Describe) I As Endorser or Co-Maker Legal Claims and Judgments Provision for Federal Income Tax.. Other Special Debt scripHon of items listed in Section 1 . t I I 'e Insurance Held (Give face amount of policies - name of company and beneficiaries). r G-17
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                                            SUPPLEMENTARY SCHEDULES
Section 2.  Note-. Payable to Banks and Others
Name and Address of Holder of Note







Amount
Original B.\l.
S






of Loan
Present Bal.
S






Tenm of
Repayments
S






Maturity
of Loan







How Endorsed, Guaranteed,
or Seemed







Section 3.  Other Stocks and Bonds'  Give listed and unlisted Stocks and Bonds  (Use separate sheet if necessary)
Face Value
or
No. of Shares





Names of Securities





Cost





Market Value as
Quotation





of Statement Date
Amount





Section 4.  Real Estate Owned.  (List each parcel separately.  Use supplemental sheets if necessary.  Each sheet must be identified as a supplement
to this statement and signed.)  (Also advise whether property is covered by title insurance, abstract of title, or both).
Title is in name of
Address of propert> (City and State)
Name and Address of Holder of Mortgage (City and State)
Type of property
Oriffinal Poet tn (mpl (i|«) X
Datft Pnrrh.iscrl
Prpspnt Martpt Vnlnf! S .. .
T,i\ AMi(>.«mcnt V^lni-
P.itf of M^rtoig^ 	 	 ,„ .
Original Arnounf S 	 	
Hi!,) urn X , , ,
M.itiinrv
Terr"1: "f Payment
S;atus of Mortgage, i e . current or delinquent. If delinquent describe delinquencies
        5. Other Personal Property.   (Describe and if any is mortgaged, state name and address of mortgage holder and amount of mortgage, terms
                                      of payment and if delinquent, describe delinquency.)
                                                              Paee 2
                                                                    G-18

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    Uoi' 6. On' "  \vsecs   (Describe)
,^B;tion 7.  UnjJU'J Tax^S   (Describe in detail, a^ to type, to whom payable, when due, amount, and what, it any,  property tax liens exist.}
SectionS.  Other Liabilities.  (Describe in detail)
di or (\Ve) ro;ti!>  ti . aKne and the statements comai'ied in the schedules herun i> j true and accurate statement of (my) or (our) financial condition
„, of the date stated herein  Tins statement i^ :;ivi;n for the purpose of inducing a lending institution to make a loan as requested in application, of the
   .Mdual or fir,.i ^hoio name appears here and to induce the United States of America to guarantee a portion of such loan.
                                                      Signature                                              Signature
                                                                    G-19

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                                                                                                FORM APPROVED
USI>'\-K1I\                                                                                    OMB NO. 40-R3S72

   ''   ^'W'°           APPLICANT'S ENVIRONMENTAL IMPACT EVALUATION
Name .iiul Addiess of Applicant (Firm Name) (Steel, Cit> , State and Zip Code)
                                                                                   t'MI'LOYLR ID NO.
                                                                                    IHACASt NO.
In order  to evaluate the specific impact your proposed project will have on the environment, please complete the following item:



Is a i-edjial waste discharge permit required under the Federal \\ater Pollution Control Act
Amendments of 1972?                                                                                 QYes    Q Nc.
If no, complete parts I  through VIII  If yes, has an application been made  foi the permit?                  PJ  Yes    f~]No
If so. what is the status of that application''                            Q  Appioved   Q  Pending        [~1 Disapproved9
If above application for permit did not co\er all facilities in your project please identify those not covered and complete balance of
form, as it per tains, to those you list  It the application for permit covered all  facilities complete Parts I, VI. VII and VIII.

  I  OI-MiRAL (Briefly describe',
     A  Location  of facility - Provide map if possible to show project location and areas which might be affected by the facility.
      B  Cluidctei of the surrounding area (include terrain, population densitv. etc )
     (   I \ pe ol pioicct (nature of activity )
 If \oiir project must conform to approved standards established by the  Federal or your state or local environmental piotection
 agencies, please identify for each of Parts II (Air), III (Water). IV (Solid) and V (Other) the appropriate regulating agencies and
 go on to the next section.  If you  are not required to conform to such  standards, please complete all questions to the best ot
 your knowledge in each part for which standards are not set.  "H)u ma> wish to consult with appropriate St no or local agencies
 in  preparing your answers.
      \l li POL I IiTION (include name and address ol agenue-* u itli cogni/.nice o\ei yom pio|Cct.  II yon ii'iiv v
      ^tJlldalds set by these agencies go on to pait III )
     ( !'•  ll'l', ph )|L\ I \
      \  \i ;n iiK-, wind) ,nc like1!)  in puulikc' an  pollution MU!> .1-- nui neialn^  exhaust s\ slcnis. III-,M! I uel inn mug uiuis  and


                                                           G-20-

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       M:;ho
-------
      A  IVwnbe activities that me likely to pioduce watei pollution.
      H  Dexuilv ujtei pollution conno! codes and/or regulations appl'.-jMc to the pioiect
      (  DON, nl1: me tli (id ;md sen^m equipment used to del ei mine quantity. and 01 t\ pe ol uatet poll tit u MI
      [)  \\li.ii le\eK (coix-entiauous ot the tolU
          Mandai di peiintt you to discliaige in }
.nving contamma-m-- to ie>ult  fioni > oui  pio|ect ) do \oui locul
 oui sewage ancl'or ivjstc uatei''
uaiei
 S'l-.K'InL'J MM! i v'l
S3
I 1

^JMi;Liv.'C  -WMW  \'.jonts
Dhehaige
expected
Ironi yotii
piu|e^t














Standard
Disehaige
expected
from yotii
pioject
\eidn\
Alkalinity
pH (h\ drogen ion
Concentration)
Hardness
Color
Biochemical oxygen
viemand
C hcniical ox>gc
Jemand
n
L>.sM>h ed ox\ sen
Turbidity
Temperature
Specillc gra\it\
( mul'UMuce
On
Stundjul














                                                             G-22

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    I-..  I'letieaiment facilities, that is. pll neuuah/crs. oil separators, screens, pie-settling nasins. etc.
       I.  Is .1 municipality, otliei local government entity, ot industry lequiicd to have prctreatmcnt
          lacilines"                                                                                   d  Yes     Q No
       2.  ll'jii industrial borrowei or substantial diieci beneficial"1- what ty pe ot pietieatment f.iulities do you plan''
    F.  Samtaiy sewage discharge (Check one and describe}:
        ^1 Municipal ticutment                         Q  Septic tank                   I	I Local  ticatinent plant
        £] Local body of water                         Q  Other	
    H  Industrial waste discharge (Check one and describe):
         ^j Municipal treatment plant                    Q Industrial treatment plant       [ I  Local body of watei
            Oilier
    II. Are sanitary and industrial waste water drainage (lows coribined''                                  LJ  Yes    I _ I \»
        Is storm tlow combined with one  or botii?                                                       Q  Yes    ^] No
        If one, which?
    I.  Will the project create a substantial increase in the volume of sewage treated by a given facility''       Q  Yes
       If yes. identify major contributors and kind of discharge from each.
IV. SOLID1-', \STI:DISPOSAL (include name and address of ag. .vies with cognizance o\er VOID  project.  !t y ou must
    to sta,'1' i-ik set by these agencies, go on to part V.)
    A.  Does jiioiect produce amounts of solid waste which cannot be  readily disposed of                   Q]  Yes
       I'or example, combustibles such as paper, bags, boxes. nonv.omhustibles such as glass, sand
       plastics, salvageable materials, sludges or filter lesidue^, tars 01  oiU. undeis 01  fl\ ash. 01
       others  It yes. identify the solid wastes.
    B. What laws, ordinances, or practices go\ern solid waste management
    ('. How ate Milid wastes disposed ot1'
    D. A:e the equipment and techniques employed adequate for the collection, haiulh.   and dispos,.. ot
        solid w:\stes?                                                                                  LJ  Yes    [  | No
        l)i' rhe\ cause noise or dust?                                                                    Q  Yes    p~] No

    H. \\iiithe\accommodatetheincreasedloadcausedbytheproject?                                   Q  Yes    j~| No

                                                          4

                                                             G-23

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V. Oflll R I OKMS OF POLLUTION  (these may include, but not be limited to radiation, noise, radio fiequency
   Iinu'Me.e/ie. vi-,tul)
    A.  \\h.,i ,ne the.V
I
I
I
I
I
I
I
C. Do Lode-s and/or appropriate regulations govern such pollution to be expected from your project7  Q Yes   [~1 No
    It "Yes", identify.

GENLRM PROJECT EFFECTS
A.  Desuibe existing land use, such as Industrial, Recreational. Residential, Sound barriers. Commercial, Semi-private,
    Public, Farm, etc., including any existing zoning classifications.
    B  Descnbe LluiiMs in land use.
    C  Will :1-e piu|eet atTect transportation, by Highway, Rail, Water or Air1'                             fj  Yes    [~] Nc
       It \es  ho'A''
    D. \\ili i' e pK'ieet affect fish, wild life, water-fowl refuges, beaches, historical sites, forested and
        scei.K area-, etc.                                                                         fl  Yes
>  II. PLL \S1 1)1 SCRIBE TIIL INDIRLC'T KFT1.CTS THE PROPOSf D PROJECT IS EXPHCTED TO HAM: ON THE
    fc\\TRO\\ll NT  (In this section include changes which, although brought about by the proposed proj>
    caused i-\  the project itself.  An access road to serve a proposed industrial  park might be included here"1
 •jj_  ' !'ON i V \LL \TION OF THE INFORMATION SUPPLIED ABOVE. OR ON THE BASIS OF INFORMATION SUPPLIED
 ""  10 111!  i i Dt-RAL OR STATE ENVIRONMENTAL PROTECTION AGENCY, PLEASE PROVIDF. A BRIEF SUMMARY
     Oh Till  ! NV! RON MENTAL IMPACT OF THE PROPOSED PROJECT  The summary shall include a description of the
     extent to \\hich the project significantly affects the environment, as provided by the National Environmental Quality Act ot
     196C) including consideration of:
     A.  i he environmental impact of the proposed project,
     B An;. ..'I'.i'ise en\nonnienial effects which cannot be avoided should the proposed project be implemented.
                                                           G-24

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    D. The lelationship between local short teim uses of man's environment and the maintenance and enhancement of
       king-term pioductivity, and
    E'.  Am ineveisible and irretrievable commitments of resources which would be involved in the proposed project should
       it he undei taken,
    F.  Have any questions or objections been raised by any governmental agency, private organi/ation
       or individual which might indicate that this proposal is, or will become, controversial9               I—I Yes    LJ  No
       If yes, please describe
IX. TO BE SIGN1-D BY APPLICANT.
        Date                                                                       Applicant
                                                 fi-25

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U3U
Form
(Rev.
TO:
TmHA 149-14 CONDITIONAL COMMITMENT FOR GUARANTEE
1-2-75)
Lender (Holder)
Lender's Address
Borrower
Case No.
State
County
Type of Loan
Principal Amount of Loan
$
From an examination of information supplied by the lender on the above proposed loan, the county committee certification
or recommendation  if required,  and other relevant information  deemed  necessary, it  appears  that  the  transaction can
properly be completed.

Therefore, the United States of America acting through the Farmers Home Administration (FmHA) hereby agrees that, in
accordance with applicable provisions of the FmHA regulations published in the Federal Register and related forms,  it will
execute  Form FmHA 449-17, "Contract  of  Guarantee,"  on the above loan at the time, subject to the conditions and
requirements specified in said regulations and below.

If the Contract of Guarantee is executed, the guarantee fee rate payable periodically by the lender or holder to FmHA while
the Contract of Guarantee is in effect, the  initial  loan subsidy rate, if any,  payable by FmHA to such lender or holder, and
the interest  rate payable  by the  borrower  in  cases in  which that rate  is limited by  statute  or is fixed from time to time
pursuant to statutory formula, will be  those  rates in effect  on the  date of this conditional commitment. Such rates and
related information may be ascertained from any FmHA office or by consulting the Federal Register.

Additional Conditions and Requirements:  I/
This conditional commitment will expire	 2J days from the date hereof unless the time is extended in
writing by FmHA, or upon the lender's earlier notification to FmHA that it does not desire to obtain an FmHA guarantee.

                                                                   UNITED STATES OF AMERICA
                                                            By:
Date:	FmHA .
                                                                                                            (Title)


 iy    Insci t any additional conditions or requirements in this space or on an attachment referred to in this space, otherwise,
      insert "NONE"
 2/    Insert number of days estimated to include issuance of the Conrract of Guarantee.


                                                                                        FmHA 449-14 (Rev. 1-2-75)


                                                      Position 2


                                                            G-26

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                                       Acceptance or Rejection of Conditions
                                          (Except in Farmer Loan Cases)

   *To:  Farmers Home Administration (FmHA):

The conditions of Form FmHA 449-14 on the other side of this page:
1. (  I  are acceptable and the undersigned lender intends to proceed with the loan transaction and to request issuance of
        of a Contract of Guarantee at the appropriate time.
2. |  I  are acceptable, but for other reasons the undersigned lender does not desire a Contract of Guarantee.
3. rj  are not acceptable and for that reason the undersigned lender does not desire a Contract of Guarantee.
4. F  1  are not acceptable, but would be acceptable if the following changes were made:
if block number "1" above is checked:

   (a)   It is understood that the following information may now be released upon request: Name and address of applicant,
        njme and address of lender, amount of loan, and general purpose of the loan.
   (b)   Jt is anticipated that  the Contract of Guarantee will be requested in approximately 	 months.
                                                                                              (Name of Lender)
                                                          By:
                (Date)                                                                    (Signature  for Lender)
                (Date)                                                                    (Signature of Applicant)

 *  Return completed and signed copy of this form to FmHA office from which it was received, except in Farmer loan cases.

**  Required in B&I and RH-MF cases, not in other cases.

On front of form at bottom of page, insert:
NOTE  TO LENDER AND APPLICANT: Complete and execute the Acceptance or Rejection of Conditions as indicated
on the back of the copy of this form and return it to FmHA except in Farmer loan cases.
                                                           G-27

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^SDA-F-niHA
Form Ki'iHA 449-22
  .cv. 6-23-75)
                                         Position 3

                        CERTIFICATION OF NON-RELOCATION
                                           AND
                  MARKHT AND CAPACITY INFORMATION REPORT
                              (To be completed by applicant)
FORM APPROVED
OMB NO. 40-R39P2
   This  form  is to  be executed by applicants for financial assistance for loan guarantees and/or grants under provisions of the
Consolidated 1 aim and Rural Development Act.
Name ot Applicant:
Location of Proposed Project:
2a. Employer ID No.
2b. Labor File No.
     This Proje< t is:
     LJ  A new business venture
     D  A new branch or facility
     O  An expansion of an existing facility
5    Affiliate or Subsidiary of:
                                                D  Refinance of Existing Loan
                                                D  A Transfer of Ownership
                                                D  Other (explain)	
     Amount of Loan/Grant:
     Purpose ot Loan or Grant - (Specify)
8.
Intoi [nation about  your  products or services: (Note: Describe each principal product or service  to be furnished
through  chis project. Do  not  list products or services already being offered unless this project also offers them and
they are essentially  an expansion of past activities. Enter in Column 6 the same information as provided in Column 4
except it should relate to employment at full capacity. Be specific. For example, "MANUFACTURE "FURNITURE-
OFFICE-WOOD DESKS".
Principal
Product
>1. (1)
P.-oduct #1
« Value
i Units
Product^ 2
S Value
i Units
1., .duct #3
S Value
i Units
I iduct H 4
S Value
1 Units
Products or Services
and S.I.C. Number
(2)




Projected Annual Sales and Average Employment to be
Generated by each product:
Latest Annual Total
Sales
(3)




Employment
(4)




At Full Capacity
Sales
(5)




Employment
(6)




                                                             G-28
                                                                                       FmHA 449-22 (Rev. 6-23-75)

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     b.    Principal Occupations:
Occupational Job Title
Col. (1)




Average Employment and Wage Rates
Current Period
Employment
(2)




Average
Wage Rate
(3)




Wlicn Fully Operational
Employment
(4)




Average
Wage Rate
(5)




     INFORMATION ABOUT YOUR MARKET
     List below, for each principal product or service, the states in which you expect to make the greatest part of your sales.
     You need  Hit  only  those  stat.s in which you expect to  sell at least 5  percent of your total  volume. If your sales are
     nationwide, enter  the word "NATIONAL" in the righthand column. If more than 5 percent of your total projected sales
     are to be in any standard metropolitan statistical area (for example, Chicago and its nearby suburbs), enter the name of the
     area. If possible, give the approximate percentage of your total sales which you expect to make in the states  and  metropolitan
     areas listed. (See sample entry in the table below.)
Principal Product
or Service
(Sample entry)
Product "X"



States and Standard
Chicago (8%)
Kentucky (15%)
Metropolitan Statistical Areas in
Indiana (12%)
Iowa (20%)
Which Sales Are Projected
Wisconsin (20%)
Nebraska (10%)



10.  INFORMATION ABOUT YOUR COMPETITORS
     Please  list the principal competitors offering the  same or a similar service or manufacturing a similar or identical product,
     regardless of where they are located, but only chose who are selling in the market area you have indicated in Section 9 above,
     where  you intend to sell. Also indicate the location of your competitor's plant(s) from which he is most likely to be serving
     your market irea. If your market is national, omit a listing of competitors shipping points.
     NOTE:   In terms of the following listing, a competitor should be considered an enterprise  offering essentially similar
     services or products. Thus, a summer resort  providing golf, swimming and  tennis  is not competitive with a winter resort
     offering only skiing and  skating. By the same token, gypsum board or particle board are not considered competitive with
     plywood, nor wood furniture with metal furniture.
A,   Names of Competitors                                     Location of plants serving market
     2.
     3.

     4.
     5.
B.   To  the  best  of your knowledge,  has  any competitor recently ceased operations  or withdrawn from  your market area?
     Give name ,'nd state reason, if known.
                                                        G-29

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Are ) ou aware  of any  potential new entries or planned expansions which will be competitive in your market area? If know.
describe by name and location.
Applicant must check one of A,  B, or C below: (NOTE:  ''Related Company" as  used in  thib form means any affiliate,
subsidiary, or~other business entity under direct, indirect or common control with applicant.)
[  [  A.  New Business Venture. This project is a new business  venture unrelated to  existing  business facilities, and that the
         applicant is not a company related to an existing business facility. (NOTE: If applicant or a related company has
         ceased or substantially reduced operations during the 24 months preceding the date of this request, the information
         required by Section 14 below must be attached.)

(  I  B.  Expansion of Applicant's Only  Business  Facility. This  project  is  an expansion  of an existing business facilit;
         located at:
        Which carries on the following operations:
t  I  C. Applicant or Related Company with Business Facility at Another Location. Applicant has attached	Pages
        containing the information required by Section 14 of this form concerning business operations conducted  by the
        Applicant or  by a related company at other locations  than the location of the proposed  Project. Applicant has
        included business operations which have ceased or have  been substantially reduced during the 24 months preceding
        the date of this Request if such operations were conducted by Applicant or a related company.
        It is not the intention of the  Applicant or any related company to relocate any present operation as a result of the
        proposed  Project;  that to the extent said  Project is undertaken to assist in  the expansion of the operations of
        Applicant through the establishment of a new branch, affiliate or subsidiary of Applicant, such expansion will not
        result in an increase of unemployment in the area of original location or in any area where Applicant or any  related
        company  now conducts  related business operations; that  any such expansion is  not being undertaken with the
        intention  of closing down or curtailing any existing operations of Applicant or of any related company; and that
        such  project  is not being undertaken with  the  intention  of  performing  as contractor or subcontractor work
        heretofore performed by  Applicant  or a related company, the transfer of which work would result in the transfer of
        employment opportunities from  one location to another and an increase in unemployment at the previous location
        of such work.
        I  agree further  that if within one year of the commencement of operations of the Project  for which the Farmers
        Home Administration (FmHA) has made  a grant, loan, or  guarantee, there should occur a significant and  related
        decline in employment in a present location or locations conducted by Applicant or a related company, the  lender,
        pursuant to instructions from FmHA, shall liquidate  the loan or accelerate the repayment of any financial assistance
        guaranteed, insured,  or provided by FmHA. I  understand that  there shall arise a  rebuttable presumption that a
        decline in employment in a present location or locations is significant and related to FmHA assistance to the Project,
        if the reduction in average employment in present facilities  and  location is equal to  (a) 50% for all locations or (b)
        25%  for one location, of the  level of employment in this  FmHA assisted Project. These understandings  and
        agreements  are  applicable to  all transferees and successors  in interest.
The  information required by  this Section  must  be  supplied if Applicant or a related company  now conducts business
operations at a location other than the location of the proposed Project, or if Applicant or a related company has ceased or
substantially reduced operations within the  24 months preceding the date of this application. A  separate  sheet of paper
should be  used for each location.  Give the following information:
(1) Name  of company,  (2) Full address  of  site on which business  operations  are or  were  conducted, (3)  Relationship of
Applicant  to business entity conducting operation, (4) Brief description of articles produced or services provided at location,
(5) Underline production articles  or services  provided which are  similar to articles to be produced or services to be provided
by the proposed Project, (6) Average number of persons employed at the location, (7) Average number of persons employed
in production of articles or services  similar  to those provided by the proposed Project, (8)  If applicable, date  on which
operations ceased, or were substantially reduced, and (9) if applicable, the size of the reduction.

                                                            G-30

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13.   Please give below name, address, telephone number and title  of person  to be contacted if any questions arise concerning
     this form.
14.   CERTli (CATION:  I, the undersigned, hereby certify that  the information reported on this form, and any attachments
     thereto, are to the best of my belief and knowledge, truly representative of the facts and reflect the future intentions of the
     Applicant as they are as of this date  :
                    (Date)                                                            (Signature of authorized official)


                                                                                                    ___
                                                                G-31

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                            APPENDIX H

      MEMORANDUM OF UNDERSTANDING BETWEEN
          THE SMALL BUSINESS ADMINISTRATION
AND THE UNITED STATES DEPARTA! ENT OF AGRICULTURE
            F ^RMERS HOME  ADMINISTRA TION

                        PREAMBLE

Public Law 94-305, which amended the  Srnall Business Act,
authorized the Small Business Administration (SBA) to assist
small bxisinesses engaged in farming and related activities under
its existing programs.  This legislation did not create any new
SBA loan programs but merely included the agricultural industries
among the industries  eligible  for SBA assistance.  Neither did the
legislation diminish,  in any way, the responsibility of the Farmers
Home Admin stration (FmllA) to meet the financial and other needs
of farmers.

This joint m< morandum reaffirms  the mutual desire  of SBA and
FmliA to cooperate in the use of their respective  Joan making
authorities  to complement the activities of each other and, to
the  extent possible, to improve and expand the delivery of
financial ass'siance to the agricultural prediction segment of the
country: all vilh the least possible c' .gree  of overlapping, confusing
or duplicating activities.

                  GENERAL GUIDELINES
1.  The Fml A administers its financial assistance programs
    through us State, District and County offices.

    The SB \ administers ii s financial assistance programs through
    its Regie nal, District and Branch offices.

    FmllA S at? Directors and  SBA District Directors will exchange
    address* s of their offices a 'id idcntilV the geographical ^vcas
    served by each.  This information wiH bo available in all
    field office"" of both rg^neies so rnplic mts can be refer*, o-d to
    the a]")}"!1 . pi'iite r-ffirv;-, .  Yheso .-W'e ' t"iYir-ls viil ma!;:1  :~i\r•<•' flu-
    Otlioj' ag MH---'P cut ivi' lo.ri i'V^';i:v:. ml .- crvic I1."-, policy ^o tb^
    rcforral r'.lvice .^r.-ca to potetitial  oppl'cnnts v/iJl bo AS acouraic-
                                H-l

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2.  FmllA  and SBA will establish a liaison at l>oth the State
   " Director/ District  Director level and tiie National level and
    periodically coordinate their activities to: (a) exchange detailed
    information  concerning loan programs,  (b/ define areas of
    cooperation  between the two agencies,  (c) assure that thei)-
    programs are servicing the intended recipients,  (d) establish
    new methods to serve the public more expeditiously, and  (e)
    achieve maximum  utilization of their respective resources.

The SBA and the FmllA agree that the interests of  agricultural
industries  will be best served and that each agency will achieve
better utilization of available resources through the following
operating guidelines:

3.  Potential applicants may contact either agency  for an interview
    but may file an application with only one agency at a time.
    However,  SBA will encourage those potential applicants that
    have been or are borrowing through the Fr iIIA  to continue
    their relationship  with that agency.

4.  Potential applicants meeting FmllA eligibility requirements
    will, at the time of initial interview, be ac vised by SB A to
    contact the appropriate FmllA County Office for assistance.

    FmHA  persennel will, at the time of initial interview,  refer
    potential applicants  who are not eligible for FmTIA assistance,
    (such as cor Derations,  partnerships or alions,  applying for
    certain loans) to SBA if they appear to be eligible for SBA
    assistance.

5.  Potential applicants are not to be referred back and forth
    between Fm IA and SBA.  Representatives  of each agency
    must be rea ^onably  certain that the applicant and proposed
    use of  proceeds may be eligible for assistance from the other
    agency before a referral is made.

6.  Neither agency will refuse a loan request 1'rom an applicant
    who prefer:, to file with that agency.

7.  Agricultural applicants filing for financial assistance from either
    agency \\ill  give written permission for Fi'iIIA and SBA to
    exchange  whatever prior or current loan r  jplication ;vH lorn
    experience information, including apprius '!>',  either 
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 8.  Applicants who are denied FmllA assistance for any reason,
     including lack of FmHA funding, may contact SBA for assistance.

 9.  Applicants fili1 g for financial assistance fro n either agency must use
   •  the forms and procedures of the agency being requested to provide the
     assistance.  An applicant who is denied assistance by either agency
     must use a new application to file with the other in accordance with that
     agency's forms and procedures.

10.  Applicants should not have to apply to two Federal agencies to borrow
     funds for a single purpose.  Therefore, if either FmHA or SBA can make
     the entire loan, the applicant should not bo referred to the other agency
     for part of the funds needed. If either FmJJA or SBA cannot make  the
     entire loan, the applicant should be referred to the other agency.  Joint
     funding with shared collateral between the agencies is not encouraged anr,1
     should be usec only as a last resort.

                     DESCRIPTION OF LENDING POLICIES

11.  The FmlTA ma^cs guaranteed loans and insu *cd loans.  Guaranteed loans
     arc loans  whore the  lending  institution advat OPS the-  entire funds from
     its account and the FmlL'V guarantees repayi lent of a certain percentage
     of principal ard interest.  Insured lor is arc those made from one of
     FmllA's insurance funds.

     The SBA makes guaranteed, immediate participation and
     direct loans. The guaranteed loans arc thos-3 where  the
     lending institution advances  the entire loan c nd the SBA
     agrees to  purchase  a percentage of the outstanding
     balance  at time of default.   Immediate participation  loans
     are those  whe^e SBA disburses a percentage- of the loan and
     the lender dis uirses the remainder- from its account.  Direct
     loans are  mace with SBA funds alone.
             FmHA LOAN PROGRAMS FOR FARMERS

12.  Operating Lorr.s.

     a.  legibility:

        Be a citiz-n of the United States
                                    H-3

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     Be unable to obtain credit cls*e\vhcre (exclusive of SBA).


        Be the operator of a family farm.

     Note:  .A "family farm" is defined as "one that will produce
     agricultural commodities for sale in sufficient quantities
     so that it is recognized as a i'arm rather than a rural  '
     residence; one that will provide substantial income by itself and
     which together v.ith any other dependable income v.lll enable
     the family to pay necessary family and other operating expenses,
     including maintenance of essential chattel and real property
     and pay debts; and one  for which the operator and his Immediate
     family provide the management and are actively engaged in the
     operation by providing  a  major amount of the farm and any
     nonfarm enterprise labor.  A reasonable amount of hired
     labor may bo used during seasonal pcakload periods. "

     b.  Loan Pu ^poses:

        Finance Livestock,  machinery and operating expenses.

        Refinance debts.

        Finance ion-farm enterprises.'


     c.  Terms:

        Up to seven years with five-year renewal.

        Interest rate  based on the cost of Treasury
        borrowings.

     d. Loan Limit -  $50,000.

13.  Farm Ownership Loans.

     a. Lli
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         Be xmaMc to obtain the cnvclit from other poi'm-::
         (exclusive of SDA).

         Bo the owner-operator of a family farm after loan is
         closed.

     b.  Loan purpose:'

         Buy land.

         Construct and repair farm buildings.

         D2velop land and pollution control measures.

         Develop farm irrigation facilities c'.nd domestic water
         supply.

         Refinance Debt.

         Finance non-farm enterprises.

     c.  Terms:

         Up to  40 years.

         Five (5) percent interest rate.

     d.  Loan Limits:

         $100,000.

         Maximum debt on security v/ith other credit is $225,000.

14.  Soil and Water Loans.

     a.  Eligibility:

         Be unable to obtain the credit elsewhere (exclusive of SF>A)

         Be a farm tenant,  o\vner, partner •'hip or corporation engog
         in farming.

     b.  Loan Purposes:

         I)o\-o]op 1'Mid and pollution control pr'Tl 'cer.

         Watei- IievelopmcMif.

         Purforos related to soil  nn:1 v/atei  con.-'o)-.  'iV.n

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     c.  'JVrms:

        Up to 40 years.

        Five (5) percent interest.

     d.  Loan Limits:

        $100,000.

        Maximum debt on security with other credit is $225,000.

15.  Recreation Loans.

     a.  Eligibility:

        Be a citizen of the United States.

        Be unable to obtain the credit elsewhere (exclusive
        of SBA).

        Be an  in lividual engaged in farming when the loan is
        applied ;or.

     b.  Loan Purposes:

        Convert all or part of the farm to outdoor recreation
        enterprises.

        Acquire land  and easements for recreational uses.

        Refinance, debts.

     c.  Terms:

        Up to  40 years.

        Five (r>) percent interest rate.
                                 H-6

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     b.  Loan Limits:

        $100,000.

        Maximum debt on security \vith other credit is $225,000.

16.  Rural Housing.

     a.  Eligibility:

        Be a U. S.  citizen or permanent resident.

        Be unable to obtain credit elsewhere (exclusive of SBA).

        Be a farmowner without decent, safe and sanitary housing
        for his own use or the use of tenants, sharecroppers,
        farm laborers or farm manager.

     b.  Loan Purpose:

        Buy, build or ^epair dwellings of molest size, design
        and cost.

     c.  Terms:

        Up to 33 years.

        Interest  rate established periodical!.; based on hous-
        ing money market rate.

     d.  Loan Limit:

        The cost of providing 711 ode si, decen , safe and sanitar}'
        housing.

17.  Business and Industry Loans.

     a.  Eligibility:

        If an individual, a U.S.  Citiren.

        A cooperative,  corporation,  partnership, trust, Indian
        tribe, c,r <>'< IK-I  J, ,;;•] oni ity.
                                 H-7

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        b.  Loan Purpose:

            Pollution control measures.

        c.  Terms:

            Up to 30 years.

            Interest rate is negotiated bet\veen lender and
            applicant.

        d.  Loan Limits:

            No statutory dollar limit; determined by cost of project
and credit factors.

   18.  Grazing Assoc iation Loans.

        a.  Eligibility:

            Be a nonp .-ofit association.

            Be unable to obtain credit else\vhere (exclusive of SBA).

            Provide saasonal grazing for association members.

        b.  Loan Purposes:

            Acquire 1'ind for gra/ing.

            Develop land for grazing.

            Pollution control measures incidental to other
            authorized purposes.

        c.  Te rm s:

            Up to 40 vcars.

            Five (5) percent interest rate.

        d.  Loan T ,ir 'its:

            \o -,1;i1. .• ;_•-  ;•)>• "'•vi'l  .'. (ir1-" ]•_'''' i  "Mmi •- - c!Cvtct" "! inrd 1)(
            vr, li'o (S' -. ;-ii]'J'. - .
                                      H-8

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19.  Irrigation,  rrninage ond soil r-nd water association lor, us.

     a.  Eligibility:

         Be an association composed primarily of farmers and  oilier
         rural rf sidents.

         Be' unable to obtain credit elsewhere (exclusive of SB.A).

         Provide a facility to serve farmers and other rural residents
         within the service  area.

     b.  Loan Purpose:

         Install  cr improve drainage facilities.

         Install, repair or enlarge irrigation facilities.

         Install  cr improve soil conservation aid water  control
         facilities including pollution abatement.

         Special-purpose machinery and equipi lent.

     c.  Terms:

         Up to 4( years.

         Five (5) percent interest rate.

     d.  Loan Li .nit:

         No statutory or regulatory dollar limit --determined
         by value of security.

NOTE:  In addit on to the eligibility requirements for specific
         programs listed above, the following eligibility require-
         ments  must be met by all FmllA boz-rowers:

         Have th > experience to corry  out the proposed operation
         to be fii'iii
         Have th  ambition to carry out the proposed
         operations.
                                   H-9

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    Hove the management ability <-n rarry oui llic obiigal ion5-; required
    in connection \\iih the ]o;in.

      SBA LOAN PROGRAMS FOR AGRICULTURAL KT\'Th'RPRiSlvS

    In addition to the specific eligibility fact rs listed under
    the following ISI3A programs, n borrov/oi' must be of good
    character, he an eligible small business utidor SI}A Rules and
    Regulations (13 CFR Parts 121 and 122), be  organized for profit,
    and be able to evidence reasonable assurance of  ability to repay
    the loan from the profits of the business.  Can be pi'oprietorship,
    partnership or corporate business organization,  and need not be
    a citizen of the U. S. A.
20. Regular Business Loans--7(a).

    a.  Eligibility:

        Be eligible under SBA Rules and Regulations (13 CFR Part 120).

        Be unable to obtain the credit from ron -Federal sources
        through utilization of personal resources or otherwise.

    'b.  Loan Purpose:

        Purchase of land and buildings and li nd improvements
        (fencing, irrigation  systems, etc. ) including pollution
        control facilities essential to the smiill business.
        Construction, renovation or improvement (including wrter
        systems) o? (i) farm building other than residential bui'c'ings
        or (ii) residential buildings essential to ihc business it nc>t
        available from other Federal source ;.

        Purchase of farm machinery and eqi ipmcnt (appliances
        and other household contents used for residential purposes
        are not eligible).

        Operati.10, expenses di redly related  -sonr'l or fan ilv rlflr'.
                                 H-10

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c.  Terms:

    The interest rate on direct ;•,>.',! SIJA .shore of immediate
    participation loans is based on a .legislative formula.

    The lendc -'s interest rate on inimedial .:• participation and
    guaranty pai ticipation loans is established by the landing
    institution, \vithin SHA policy, but cannot exceed SHA's
    maximum which is periodically published in the Federal
    Register.

    Maturit}' of the loans vdll generally not  exceed one year for
    annual seed, feed, fertilizer and other annual needs,  7 years
    for that portion of the loan user! for v/orl:ing capital,  10 years
    for that portion of the loan used for li\ estock and/or farm
    machinery and  equipment, and 20 years for that portion
    of the loan used for acquisition or construction of real
    estate,  liowevcr, all borrowers are  expected to repay .
    the loan as soon as possible r.nd these maximum  maturities
    are not ai tomatically available in every case.

    SBA loan; arc generally repaid in even  monthly payments
    of princip il and interest.  Hov.ever,  quarterly,  semiannual,
    annual or seasonal payments can be arranged when
    necessary.

d.  Loan Lim its:

    Direct loans have an  administrative limit of $150,000.

    Immediate participation loans have an administrative limit
    of $1 f)0, 000, SJ"JA share. (Both the  direct and immediate
    participation administrative limits can be waived in exceptional
    situations by SBA's Regional Directors. )

    Guaranty  participation loans ha\e a limit of $r>50, 000,
    SBA share, except that in  exceptional .situations the SBA
    share can be increased to  c'500, 000.

    The limits on a borrower's toial indeb1 odness to  SBA on all
    outstandi  g loans is  (i) the rr-gre^ate  cl>" direct and the
    SP.A shar1^ of immediate participation loans cannot excor-d
    $350, O'JO  and (ii) the  agf;rei;:1e of direct, and the Si-JA share
    of iin nu.'f! ;af <• f>ar'l3'^in."'1 ion r i;d :',ua rrni > partifipal ic.'ti loans
    cannot ex -red  sf..OO, OfiQ  ;'.{  c11^' ore 1ini".
                              H-ll

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21. Economic Opi ortuiuly 1 .onus.

    a.  Eligibility:

        Must be economically or socially disndvantagcd.

        Meet the . ligibility requirements set j. >rth in SBA. Rules and
        Regulations (1 3 CKR Parts  119 and  120).

    b.  Loan Purposes:

        Can be used for the same purposes  as Regular Business Loans.

    c.  Terms:

        Interest on direct and SBA share of immediate participation
        loans is subject to a legislative formula, and is subject to
        change quarterly.

        The lender's interest on immediate ard guaranty  participation
        is the same as for regular business leans.

        Maturities of these loans are generally restricted to  10
        years for uorking capital other than annual operating
        expenses and farm machinery and equ'pment and  to the
        legislative limit of 15 years for X|eal estate purposes.
        However, no borrower  will receive a  longer maturity
        than is necessary for the loan to be repaid from ihe
        business income.

    d.  Loan Limits:

        These loans cannot exceed $100,000 SBA shore,  whether
        direct, immediate participation or gu iranty.

22. Water Pollution Control Loans.
        Alccl cli' iiij 1 i I',  re'iuirt'm cnf s set forth in Hi\  Ruli-s
        He^uk,l: >i- (I.'.  Ci'll  Paris I'^O  and  I"1.).

        Must ha<. o  a statement from LPA of t~e mx essitv and
                                  H-12

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    b.  Loan Purposes:

        Only to make modifications and change." necessary 1o meet
        the Federal standards established under the .Federal Water
        Pollution  Control Act or State  siandai\ s established in
        compliance v/ith the Federal Water Pollution ControJ Act.

    c.  Terms:

        Interest rate same as for Regular Business Loans.

        Maturity not to exceed 30 years.

    d.  Loan Limits:

        No dollar limit.

23. Other Substantial Economic Injury Programs.

    The SBA has loan authority to aid  small businesses that
    suffer substantial economic injury as a result of a  Federal
    action or Federally directed action, such as Occupational
    Health and Safety regulations, Air Polluti in Control
    regulations or being displaced by a  'eder i]ly financed
    construction project.   These programs ai e more completely
    described in 13 CFR Part 123.

              ADMINISTRATIVE GUIDELINES

24. The services of FmllA and SBA to lender;; and applicants  are,
    by mutual agreement, those that each agency would provide
    any eligible applicant  in the normal course of business and there
    will be no reimbursement by cither agency to the other for such
    services.

25. The National Office  of FinllA and the Cen ral Office of SBA will
    cooperate v/ith each oilier in counseling t ieir field  offices and
    in resolving  pi-obJenis  in specific cn^e<.

2C. This IMcmor mdinn of Understanding in ru  v/av alters or
    supersedes 'ho existing Alemorandums b l-v^on Hie tv.-o
    agencies co% c I-VT f)if;ir di-:actor (frarr^c ncy) loan  rmthoiitv
    and F.rli \'  . '   ••	: li-:^  ' -i"! f.r-r i  I'r.'-.r-i- n<-.
                                    H-13

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27. This Agreement in ay be amended at any time by written
    agreement of both pax-tics.

28. This agreemcn  shall take effect upon the dc- e of execution
    thereof.
         Name
         Administrator
         SBA
    Dote:
  Name
   Administrator
   FmllA
Date:r.
                                     H-14

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                                      APPENDIX  I
                        INDUSTRIAL  DEVELOPMENT  BOND  FEES
                                    FINANCIAL EXPENSES
                                     - DELAWARE  -

  All expenses incurred by the Department of Community Affairs and Economic Development are charged to
the appropriate project to which they apply. These expenses include, but are not limited to:

     1. The basic service charge for the costs of processing the bond issue, and the annual service fee for the
       maintenance of the project. These costs are indicated below.

       a. GENERAL OBLIGATION BONDS
          Basic Service Charge:

                  BOND ISSUE                        CHARGE

          S  200,000 to S  600,000	1.0%
           $600,001 to $1,200,000	$6,000 plus .7% of amount
                                                over $600,000 to $1,200,000
          $1,200,001 to $3,000,000	$10,200 plus .5% of amount
                                                over $1,200,000 to $3,000.000

       Annual service fee on each project is 1%% of the annual payment of interest plus principal.
       b. REVENUE BONDS
          Basic Service Charge:

                 BOND ISSUE                        CHARGE

          $    0     toS  500,000	$2,500
           $500,001 to $1,200,000	$2,500 plus .5% of amount over
                                                     $500,000 to $1,200,000
          $1,200,001 to $2,000,000	56,000 plus .4% of amount over
                                                     $1,200,000 to $2,000,000
          $2,000,001 to $3,000,000	-	$9,200 plus .3% of amount over
                                                     $2,000,000 to $3,000,000
          $3,000,001 to $5,000,000	- $12,200 plus .2% of amount over
                                                     $3,000,000 to $5,000,000

       Annual service fee on each project is $400 based on 20 hours a year at S20 per hour.
       Time spent over 20 hours will bs billed at the rate of $20 per hour.

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                                  TECHNICAL REPORT DATA
                           (Please read Instructions on the reverse before completing/
1  REPORT NO.
  EPA-340/1-77-023
                                                          3. RECIPIENT'S ACCESSIOC*NO.
4 TITLE AND SUBTITLE
  Major Financial Assistance Programs  Available for
  Industrial Pollution Control Expenditures-Federal and
  EPA Region III State Programs	
             5 REPORT DATE
                June 1,. 1977
             6. PERFORMING ORGANIZATION CODE
7. AUTHOR(S)
  Charles R. Marshall
                                                          8. PERFORMING ORGANIZATION REPORT NO.
9 PERFORMING ORGANIZATION NAME AND ADDRESS

  JACA CORP.
 506 Bethlehem Pike
  Ft. Washington,  Pa.   19034
                                                           10. PROGRAM ELEMENT NO.
             11. CONTRACT/GRANT NO.

                68-01-3154
12. SPONSORING AGENCY NAME AND ADDRESS
  Environmental Protection Agency
  Region III
  6th  and Walnut Streets
  Philadelphia, Pa. 19107
             13. TYPE OF REPORT AND PERIOD COVERED
                Final
             14. SPONSORING AGENCY CODE
15. SUPPLEMENTARY NOTES

  Prepared for Fred Knapp, Project  Officer
16. ABSTRACT
                industrial  and farming sectors  in  the  EPA's Region III have recourse  to
  many federal  and state programs aimed at reducing pollution control expenditures.
  The federal programs  provide more significant cost  reductions than the state programs.
  The mining and  manufacturing sectors have recourse  to four federal financing
  programs that provide low interest, long term loans,  including Industrial Development
  Administration  loans  and two specially funding  Small  Business Administration programs.
  The farm sector has  recourse to five pollution  control programs, namely those  of the
  Farmers Home  Administration and the Small Business  Administration.
           In addition  to  financing, all existing businesses may amortize pollution
  control equipment rapidly for federal income tax purposes.  However, rapid amortizati,i
  is only attractive for equipment with a useful  life greater than 12 years and  wffere
  their own discount rate  exceeds 10 percent.
           Businesses  that have their wastewaters treated by a publicly owned treatment
  works have an additional benefit of the absence of  an interest cost for at least
  75 percent of the construction costs of the  works.
           All  end-of-line pollution control equipment  is eligible for federal and
  state programs,  however, several programs exclude process changes.
           The  diversity of assistance programs for pollution control is even greater
  at the state  level.
                               KEY WORDS AND DOCUMENT ANALYSIS
                  DESCRIPTORS
 Rapid Amortization               Financing
 Small Business Administration    Depreciation
 Industrial Development Bonds     Pollution Control
 User Charges                     Certification
 Industrial Cost Recovery
 Farmers Home Administration
 Economic Development Administration
                                              b.IDENTIFIERS/OPEN ENDED TERMS
                          c.  COSATI Field/Group
13 DISTRIBUTION STATEMENT
   Release Unlimited
19. SECURITY CLASS (This Report/
                                                                        21. NO. OF PAGES
                                              20 SECURITY CLASS (This page)
                                                                        22. PRICE
                                                                              _224_
        20-1 (9-73)
                                                         * U S GOVERNMENT PRINTING OFFICE. J977— 720-335/6020

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