(b) Communities requesting assistance shall meet the following requirements:

1. (1) The borrower must:

   1. (A) Establish a dedicated source of funds for repayment of the loan; and
   2. (B) Enter legal and binding commitments with the Arkansas Natural Resources Commission and the Arkansas Development Finance Authority to secure financing;

2. (2) The borrower must comply with:

   1. (A) The requirements of this part;
   2. (B) The requirements of the Water Quality Act of 1987 as amended; and
   3. (C) All applicable state laws, requirements, and rules;

3. (3)

   1. (A) Disbursements may be made monthly based upon actual work done and costs incurred, except project performance services that will be disbursed as approved by the commission staff.
   2. (B) Funds will not be disbursed from the Arkansas Clean Water Revolving Loan Fund without approval by the commission staff;

4. (4)

   1. (A) The borrower shall provide an estimated completion date for construction to be used to develop the loan repayment schedule.
   2. (B) Repayment shall begin on this date no matter the date construction is completed.
   3. (C) The loan repayment period shall not exceed the federal law requirements;

5. (5)

   1. (A) The repayment schedule will be based on semiannual payments for the life of the loan.
   2. (B) The borrower will make monthly payments equal to one-sixth (1/6) of a semiannual payment.
   3. (C) The authority will deposit these payments in an interest-bearing account, and the interest will be credited to the borrower on the next repayment.
   4. (D) This procedure is used to monitor the borrower's ability to repay the loan before a repayment is due;

6. (6)

   1. (A) In case of cost overruns during construction, there will be no increase in the loan amount.
   2. (B) Should additional funding be required, the borrower must apply for a second loan; and

7. (7)

   1. (A) In case of cost underruns, the borrower will only repay the amount actually borrowed.
   2. (B) The repayment schedule will be recalculated on the estimated completion date.
   3. (C) The payments will be adjusted if there is a material difference between the amount actually borrowed and the amount available to the borrower.
   4. (D) A material difference will be determined and mutually agreed upon by the:

(i) Commission staff;

1. (ii) Authority; and

   1. (iii) Trustee.