To be eligible to receive a grant, loan and grant combination, or loan under this subpart:

(a) The applicant must be legally organized as an incorporated organization, an Indian tribe or tribal organization, as defined in 25 U.S.C. 450b(b) and (c), a state or local unit of government, a consortium, as defined in § 1734.3, or other legal entity, including a private corporation organized on a for-profit or not-for profit basis. Each applicant must provide written evidence of its legal capacity to contract with RUS to obtain the grant, loan and grant combination, or the loan, and comply with all applicable requirements. If a consortium lacks the legal capacity to contract, each individual entity must contract with RUS in its own behalf.

(b) The applicant proposes to utilize the financing to:

(1) Operate a rural End-User Site for the purpose of providing Distance Learning or Telemedicine services; or

(2) Deliver distance learning or telemedicine services to entities that operate a rural community facility or to residents of rural areas at rates calculated to ensure that the benefit of the financial assistance is passed through to such entities or to residents of rural areas.