Definitions and Abbreviations

The Rural Business-Cooperative Service is amending its regulations for the Business and Industry Guaranteed Loan Program to clarify that the Agency guarantee does not cover default and penalty interest or late charges. The Agency's regulations are currently silent on this issue. However, it has always been the Agency's policy not to pay out additional cost for default interest, penalty interest, and late charges calculated and submitted on a final report of loss claim under the Loan Note Guarantee. The Agency does permit the lender to charge default interest with prior Agency approval. By defining ``interest'' in the definition section of the regulation and clarifying the Agency's policy as it relates to default interest, penalty interest, and late charge, this will avert any misunderstandings.