Prepayment Authority Under the Rural Electrification Act of 1936


Section 306A of the Rural Electrification Act of 1936, as amended, which authorizes borrowers of Federal Financing Banking loans to prepay those loans if private capital is used to replace the loan, does not preclude prepayment with funds obtained by means other than refinanced loans secured by existing Rural Electrification Act loan guarantees. In particular, prepayment may be made from internally generated funds.

Section 306A does not authorize the issuance of regulations creating a priority in favor of borrowers who agree to prepay such loans with internally generated funds.

Updated July 9, 2014