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F. TREATMENT OF LOANS <br />The interim final rule allowed recipients to use SLFRF funds to make loans for uses that <br />are otherwise eligible (for example, for small business assistance). Subsequent guidance clarified <br />how recipients must track and dispose of program income from loans, consistent with the <br />statutory requirements for the timing of SLFRF expenditures. <br />SLFRF funds must be used to cover "costs incurred" by the recipient between March 3, <br />2021 and December 31, 2024. The interim final rule provided that SLFRF funds must be <br />obligated by December 31, 2024 and expended by December 31, 2026. In using SLFRF funds to <br />make loans, recipients must be able to determine the amount of funds used to make a loan and <br />must comply with restrictions on the timing of the use of funds and with restrictions in the <br />Uniform Guidance. <br />When SLFRF funds are used as the principal for loans, there is an expectation that a <br />significant share of the loaned funds will be repaid. Thus, recipients may not simply consider the <br />full amount of loaned funds to be permanently expended and must appropriately account for the <br />return of loaned funds. <br />For loans that mature or are forgiven on or before December 31, 2026, the recipient must <br />account for the use of funds on a cash flow basis, consistent with Treasury's guidance regarding <br />loans made by recipients using payments from the Coronavirus Relief Fund.380 Recipients may <br />use SLFRF funds to fund the principal of the loan and in that case must track repayment of <br />principal and interest (i.e., "program income," as defined under 2 CFR 200). When the loan is <br />made, recipients must report the principal of the loan as an expense. <br />3" Coronavirus Relief Fund for States, Tribal Governments, and Certain Eligible Local Governments, 86 FR at <br />4192. <br />366 <br />