BORROWER TRAINING REQUIREMENTS
Title 7: Agriculture
PART 764—DIRECT LOAN MAKING
Subpart K—Borrower Training and Training Vendor Requirements
Contents
§764.451
§764.452
§764.453
§764.454
§764.455
§764.456
§764.457
§764.458
§764.459
Purpose.
Borrower training requirements.
Agency waiver of training requirements.
Actions that an applicant must take when training is required.
Potential training vendors.
Applying to be a vendor.
Vendor requirements.
Vendor approval.
Evaluation of borrower progress.
§764.451 Purpose.
The purpose of production and financial management training is to help an applicant develop and
improve skills necessary to:
(a) Successfully operate a farm;
(b) Build equity in the operation; and
(c) Become financially successful and prepared to graduate from Agency financing to commercial
sources of credit.
§764.452 Borrower training requirements.
(a) The applicant must agree to complete production and financial management training, unless the
Agency provides a waiver in accordance with §764.453, or the applicant has previously satisfied the
training requirements. In the case of an entity:
(1) Any individual member holding a majority interest in the entity or who is operating the farm must
complete training on behalf of the entity, except as provided in paragraph (a)(2) of this section;
(2) If one entity member is solely responsible for production or financial management, then only that
member will be required to complete training.
(b) When the Agency determines that production training is required, the applicant must agree to
complete course work covering production management in each crop or livestock enterprise the Agency
determines necessary.
(c) When the Agency determines that financial management training is required, the applicant must
agree to complete course work covering all aspects of farm accounting and integrating accounting
elements into a financial management system.
(d) An applicant who applies for a loan to finance a new enterprise, such as a new crop or a new
type of livestock, must agree to complete production training with regard to that enterprise, even if
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BORROWER TRAINING REQUIREMENTS
production training requirements were waived or satisfied under a previous loan request, unless the
Agency provides a waiver in accordance with §764.453.
(e) Even if a waiver is granted, the borrower must complete borrower training as a condition for
future loans if and when Agency supervision provided in 7 CFR part 761 subpart C reflects that such
training is needed.
(f) The Agency cannot reject a request for a direct loan based solely on an applicant's need for
training.
(g) The Agency will provide written notification of required training or waiver of training.
§764.453 Agency waiver of training requirements.
(a) The applicant must request the waiver in writing.
(b) The Agency will grant a waiver for training in production, financial management, or both, under
the following conditions:
(1) The applicant submits evidence of successful completion of a course similar to a course
approved under section §764.457 and the Agency determines that additional training is not needed; or
(2) The applicant submits evidence which demonstrates to the Agency's satisfaction the applicant's
experience and training necessary for a successful and efficient operation.
(c) If the production and financial functions of the operation are shared among individual entity
members, the Agency will consider the collective knowledge and skills of those individuals when
determining whether to waive training requirements.
§764.454 Actions that an applicant must take when training is required.
(a) Deadline for completion of training. (1) If the Agency requires an applicant to complete training,
at loan closing the applicant must agree in writing to complete all required training within 2 years.
(2) The Agency will grant a one-year extension to complete training if the applicant is unable to
complete training within the 2-year period due to circumstances beyond the applicant's control.
(3) The Agency will grant an extension longer than one year for extraordinary circumstances as
determined by the Agency.
(4) An applicant who does not complete the required training within the specified time-period will be
ineligible for additional direct FLP loans until the training is completed.
(b) Arranging training with a vendor. The applicant must select and contact an Agency approved
vendor and make all arrangements to begin training.
(c) Payment of training fees. (1) The applicant is responsible for the cost of training and must
include training fees in the farm operating plan as a farm operating expense.
(2) The payment of training fees is an authorized use of OL funds.
(3) The Agency is not a party to fee or other agreements between the applicant and the vendor.
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(d) Evaluation of a vendor. Upon completion of the required training, the applicant will complete an
evaluation of the course and submit it to the vendor. The vendor will forward the completed evaluation
forms to the Agency.
§764.455 Potential training vendors.
The Agency will contract for training services with State or private providers of production and
financial management training services.
§764.456 Applying to be a vendor.
(a) A vendor for borrower training services must apply to the Agency for approval.
(b) The vendor application must include:
(1) A sample of the course materials and a description of the vendor's training methods;
(2) Specific training objectives for each section of the course;
(3) A detailed course agenda specifying the topics to be covered, the time devoted to each topic,
and the number of sessions to be attended;
(4) A list of instructors and their qualifications;
(5) The criteria by which additional instructors will be selected;
(6) The proposed locations where training will take place;
(7) The cost per participant, including cost for additional members of a farming operation;
(8) The minimum and maximum class size;
(9) The vendor's experience in developing and administering training to farmers;
(10) The monitoring and quality control methods the vendor will use;
(11) The policy on allowing Agency employees to attend the course for monitoring purposes;
(12) A plan of how the needs of applicants with physical, mental, or learning disabilities will be met;
and
(13) A plan of how the needs of applicants who do not speak English as their primary language will
be met.
§764.457 Vendor requirements.
(a) Minimum experience. The vendor must demonstrate a minimum of 3 years of experience in
conducting training courses or teaching the subject matter.
(b) Training objectives. The courses provided by a vendor must enable the applicant to accomplish
one or more of the following objectives:
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BORROWER TRAINING REQUIREMENTS
(1) Describe the specific goals of the farming operation, any changes required to attain the goals,
and outline how these changes will occur using present and projected cash flow budgets;
(2) Maintain and use a financial management information system to make financial decisions;
(3) Understand and use an income statement;
(4) Understand and use a balance sheet;
(5) Understand and use a cash flow budget; and
(6) Use production records and other production information to identify problems, evaluate
alternatives, and correct current production practices to improve efficiency and profitability.
(c) Curriculum. At least one of the following subjects must be covered:
(1) Business planning courses, covering general goal setting, risk management, and planning.
(2) Financial management courses, covering all aspects of farm accounting and focusing on
integrating accounting elements into a financial management system.
(3) Crop and livestock production courses focusing on improving the profitability of the farm.
(d) Instructor qualifications. All instructors must have:
(1) Sufficient knowledge of the material and experience in adult education;
(2) A bachelor's degree or comparable experience in the subject area to be taught; and
(3) A minimum of 3 years’ experience in conducting training courses or teaching.
§764.458 Vendor approval.
(a) Agreement to conduct training. (1) Upon approval, the vendor must sign an agreement to
conduct training for the Agency's borrowers.
(2) The agreement to conduct training is valid for 3 years.
(3) Any changes in curriculum, instructor, or cost require prior approval by the Agency.
(4) The vendor may revoke the agreement by giving the Agency a written 30-day notice.
(5) The Agency may revoke the agreement if the vendor does not comply with the responsibilities
listed in the agreement by giving the vendor a written 30-day notice.
(b) Renewal of agreement to conduct training. (1) To renew the agreement to conduct training, the
vendor must submit in writing to the Agency:
(i) A request to renew the agreement;
(ii) Any changes in curricula, instructor, or cost; and
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BORROWER TRAINING REQUIREMENTS
(iii) Documentation that the vendor is providing effective training.
(2) The Agency will review renewal requests in accordance with §764.457.
§764.459 Evaluation of borrower progress.
(a) The vendor must provide the Agency with a periodic progress report for each borrower enrolled
in training in accordance with the agreement to complete training. The reports will indicate whether the
borrower is attending sessions, completing the training program, and demonstrating an understanding of
the course material.
(b) Upon borrower completion of the training, the vendor must provide the Agency with an
evaluation of the borrower's knowledge of the course material and assign a score. The following table lists
the possible scores, the criteria used to assign each score, and Agency consideration of each score:
Score Criteria used to determine score Agency consideration
1
If the borrower:
• Attended sessions as agreed,
Training requirement associated with course is complete.
• Satisfactorily completed all
assignments, and
• Demonstrated an understanding
of the course material.
2
If the borrower:
• Attended sessions as agreed,
and
Training requirement associated with course is complete.
Additional Agency supervision may be necessary.
• Attempted to complete all
assignments, but
• Does not demonstrate an
understanding of the course
material.
3
If the borrower did not:
• Attend sessions as agreed, or
• Attempt to complete
assignments, or
• Otherwise make a good faith
effort to complete the training.
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Training requirement associated with course is not complete.
The borrower is ineligible for future direct loans until the
training is completed.