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May a Grantee Use an AFG-Funded Vehicle as Collateral for a Loan?

FEMA has been answering fire grant questions. In this latest installment, FEMA addresses the issue of AFG-funded vehicles being used as loan collateral. FEMA says:

You may not use equipment or vehicles purchased with AFG funds, or any other Federal grant funds, as collateral for a loan. When you accepted the AFG award, you agreed to follow certain requirements of the Federal government regarding the use of the grant funds.

Using a grant-funded vehicle as collateral would place the vehicle at risk should the grantee be unable to meet the lender’s conditions for any reason. Should this occur, the grant-funded vehicle could be taken from the awardee and sold.

AFG awardees agree to “… use the equipment in the project or program for which it was acquired as long as needed, whether or not the project or program continues to be supported by Federal funds and shall not encumber the property without the approval of the Federal awarding agency. When no longer needed for the original project or program, the recipient shall use the equipment in connection with its other federally sponsored activities…” (2 CFR 215.34(c) Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and other Nonprofit Organizations.)

For more information, call the AFG Help Desk at 866-274-0960 or your Regional AFG Fire Program Specialist, or visit the AFG Website. Questions may be e-mailed to the AFG Help Desk at [email protected].