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FAR and DFARS › FAR Part 32: Contract Financing › Subpart 32.3

FAR 32.304-8 Other borrowing.

The codified text (eCFR, as of 2026-10-02). Under the Revolutionary FAR Overhaul ↗, agencies follow class deviations with new text for many parts while the formal rules go through the Federal Register: check the solicitation and your contract's clauses, which rule.

In plain English

This section addresses situations where a contractor with a guaranteed loan needs to borrow additional money from other sources. It says such outside borrowing may be allowed when necessary, but only if the agency consents and applies certain restrictions. Contractors should understand that extra borrowing during the guaranteed loan period is not automatic and comes with conditions.

Applies to: Contractors with guaranteed loans who seek additional borrowing outside the guarantee

What it requires

  • Obtain agency consent before obtaining other borrowing during the guaranteed loan period
  • Provide appropriate documentation to the guaranteeing agency at intervals not longer than 30 days to disclose outstanding unguaranteed borrowings

Key terms: guaranteed loan · other borrowing · financing institution · collateral security · guaranteeing agency

Written by AI from this section's text. A guide, not legal advice: the text below rules.

The text

(a) Because of the limitations under guaranteed loans, some contractors seek to supplement the loan by other borrowing (outside the guarantee) from the financing institution or other sources. It has been recognized in practice that, while prohibition of borrowings outside the guaranteed loan is preferable when practicable in a given V-loan case, such other borrowings should be permitted when necessary.

(b) If the agency consents to the contractor obtaining other borrowing during the guaranteed loan period, the agency shall apply the following restrictions:

(1) A reasonable limit on the amount of other borrowing.

(2) If guaranteed and unguaranteed loans are made by the same financing institution, a requirement that any collateral security requested by the institution under the unguaranteed loan is also to be secondary collateral for the guaranteed loan.

(3) A requirement that the contractor provide appropriate documentation to the guaranteeing agency, at intervals not longer than 30 days, to disclose outstanding unguaranteed borrowings.

← 32.304-7 Contract surety bonds and loan guarantees. · 32.305 Loan guarantees for terminated contracts. →

Rule changes for FAR Part 32

Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.

FAR 32.304-8 Other borrowing · SpendQuery