Letters of Credit and Performance Bonds

LettersofCreditand PerformanceBonds

Whatisrequired? 1

DuringtheBroadbandInfrastructureGrant(BIG)application process,applicantsmustsubmitaletterofcommitment fromabank,creditunion,orotherfinancialinstitution confirmingtheirintenttoissueanofficialLetterofCredit (LOC)orperformancebondtotheapplicantinthefuture Thisletterofcommitmentisnottheofficialdocument requiredlateron Thepurposeofthiscommitmentnoticeis toshowtheUtahBroadbandCenter(UBC)thatthe applicantwillbeabletoobtainthenecessaryfinancial backingwhenawardsaregiven

Beforeenteringintoanysubgranteeagreement,each prospectivesubgranteeshallobtaineitheranirrevocable standbyLOCoraperformancebondworthatleast10%of thesub-awardamount Forexample,ifaproviderreceives awardstotaling$2million,theLOCorbondwouldneedto befor$200,000 ThismustbeprovidedbeforeanyBIG fundsaredisbursed

IfusinganLOC,applicantsmustsubmitanopinionletter fromlegalcounselconfirmingthattheLOCwillnotbe consideredpartoftheapplicant’sestateincaseofa bankruptcyproceeding Thisrequirementdoesnotapplyto performancebonds

WhatinstitutionsqualifytoissueLOC/bonds? 2

TheLOCcancomefromeitherabankorcreditunion.Banksmust beinsuredbytheFDICandhaveaWeissbanksafetyratingofBorbetter CreditunionsmustbeinsuredbytheNationalCredit UnionAdministrationandhaveaWeisscreditunionsafetyrating ofB-orbetter.Acompanymustissueperformancebondswitha certificateauthorityasanacceptablesuretyonfederalbonds

LettersofCreditandPerformanceBonds

Isthereatemplateforapplicantstouse?

Yes AmodelLOCwillbepostedontheUBCgrantswebsite Thereis nospecifictemplateforthecommitmentletter,performancebond, orbankruptcydisclosureletter.

Whatisthedeadlinefortheserequirements?

TheLOC(withbankruptcyletter)orperformancebondisneeded beforeanyawardagreementscanbefinalized.Thecommitment letter(asopposedtotheofficialLOC/bond)isdueatthetimeof application Itisadvisedtostartworkingongettingthisnow Ifa commitmentlettercannotbeobtainedbeforetheapplication deadline,pleasesubmititassoonaspossibleandexplainthe delayintheBIGapplicationnarrative.

WherecanIreadmoreabouttheserequirements?

UBC’sBIGisfundedbythefederalBroadbandEquity,Access, andDeployment(BEAD)programadministeredbytheNational TelecommunicationsandInformationAdministration.(NTIA)The BEADNoticeofFundingOpportunity(NOFO)canbefoundhere; thereisasectionregardingLOCrequirementsforBEAD-funded projectsonpage72ofthisdocument Pleasenotethatthe requirementsintheNOFOwerechangedlaterinNTIA’sBEAD LetterofCreditWaiver.UBCisadheringtotheupdatedguidance intheLetterofCreditWaiver