7 CFR § 1738.154 - Security.

(a) The broadband loan or loan/grant combination must be secured by the assets purchased with the loan or loan/grant combination funds, as well as all other assets of the Applicant and any other cosigner of the Award documents except as allowed under section 601(h)(2) of the RE Act. With respect to loan/grant combinations, all grant assets must also be covered by a security interest in favor of the Government for the average composite economic life of all project assets financed with assistance, regardless of whether the loan is paid off before the maturity date. Additionally, the sale of all such grant assets shall be governed by 2 CFR part 200, regardless of the entity type of the Awardee.

(b) The Agency must be given an exclusive first lien, in form and substance satisfactory to the Agency, on all of the Applicant's property and revenues and such additional security as the Agency may require. The Agency may share its first lien position with another lender on a pari passu, prorated basis if security arrangements are acceptable to the Agency.

(c) Unless otherwise designated by the Agency, all property purchased with loan and loan/grant combination funds must be owned by the Applicant.

(d) In the case of loan and loan/grant combinations that include financing of facilities that do not constitute self-contained operating systems, the Applicant shall furnish assurance, satisfactory to the Agency, that continuous and efficient service that meets the broadband build-out requirements as noted in § 1738.55 will be rendered.

(e) The Agency will require adequate financial, investment, operational, reporting, and managerial controls in the Award documents.