# § 940c. Cushion of credit payments program
**(a)** **Establishment**
**(1)** **In general**
**(A)** **Development and promotion of program** The Secretary shall develop and promote a program to encourage borrowers to voluntarily make deposits into cushion of credit accounts established within the Rural Electrification and Telephone Revolving Fund.
**(B)** **Termination** December 20, 2018
Effective on , no deposits may be made under subparagraph (A).
**(2)** **Interest**
**(A)** **In general** Amounts in each cushion of credit account shall accrue interest to the borrower at a rate of 5 percent per annum.
**(B)** **Reduction** Notwithstanding subparagraph (A), amounts in each cushion of credit account shall accrue interest to the borrower at a rate equal to—
**(i)** 4 percent per annum in fiscal year 2021; and
**(ii)** the then applicable 1-year Treasury rate thereafter.
**(3)** **Balance**
**(A)** **In general** A borrower may reduce the balance of its cushion of credit account only if the amount obtained from the reduction is used to make scheduled payments on loans made or guaranteed under this chapter.
**(B)** **Prepayment** December 20, 2018September 30, 2020
Notwithstanding subparagraph (A) and subject to subparagraph (C), beginning on , and ending with , a borrower may, at the sole discretion of the borrower, reduce the balance of its cushion of credit account if the amount obtained from the reduction is used to prepay loans made or guaranteed under this chapter.
**(C)** **No prepayment premium** Notwithstanding any other provision of this chapter, no prepayment premium shall be imposed or collected with respect to that portion of a loan that is prepaid by a borrower in accordance with subparagraph (B).
**(D)** **Mandatory funding** section 661c of title 2section 661a of title 2
Notwithstanding , out of any funds in the Treasury not otherwise appropriated, the Secretary of the Treasury shall make available such sums as necessary to cover any loan modification costs as defined in .
**(b)** **Uses of cushion of credit payments**
**(1)** **In general**
**(A)** **Cash balance** Cushion of credit payments shall be held in the Rural Electrification and Telephone Revolving Fund as a cash balance in the cushion of credit accounts of borrowers.
**(B)** **Interest** All cash balance amounts (obtained from cushion of credit payments, loan payments, and other sources) held by the Fund shall bear interest to the Fund at a rate equal to the weighted average rate on outstanding certificates of beneficial ownership issued by the Fund.
**(C)** **Credits** The amount of interest accrued on the cash balances shall be credited to the Fund as an offsetting reduction to the amount of interest paid by the Fund on its certificates of beneficial ownership.
**(2)** **Rural economic development subaccount** October 1, 1987
The Secretary shall maintain a subaccount within the Rural Electrification and Telephone Revolving Fund to which shall be credited, on a monthly basis, a sum determined by multiplying the outstanding cushion of credit payments made after , by the difference (converted to a monthly basis) between the average weighted interest rate paid on outstanding certificates of beneficial ownership issued by the Fund and 5 percent.
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**Source Credit**: (May 20, 1936, ch. 432, title III, § 313, as added Pub. L. 100–203, title I, § 1403, Dec. 22, 1987, 101 Stat. 1330–21; amended Pub. L. 103–354, title II, § 235(a)(13), Oct. 13, 1994, 108 Stat. 3221; Pub. L. 115–334, title VI, §§ 6503, 6504(b), Dec. 20, 2018, 132 Stat. 4772, 4773.)
## Editorial Notes
### Amendments
2018—Subsec. (a)(1). , designated existing provisions as subpar. (A), inserted heading, and added subpar. (B).
Subsec. (a)(2). , designated existing provisions as subpar. (A), inserted heading, and added subpar. (B).
Subsec. (a)(3). , designated existing provisions as subpar. (A), inserted heading, and added subpar. (B).
Subsec. (b)(2). , struck out subpar. (A) designation and heading before “The Secretary shall”, substituted “5 percent.” for “the 5 percent rate of interest provided to borrowers on cushion of credit payments.”, and struck out subpars. (B) to (E) which related to grants, repayments, proceeds, and number of grants, respectively.
1994—Subsecs. (a)(1), (b)(2)(A) to (C). substituted “Secretary” for “Administrator”.