(a) To the extent provided in § 455.30(d), financial assistance will be initially available for schools and hospitals experiencing severe hardship based upon an applicant's inability to provide the non-Federal share as specified in the State plan pursuant to § 455.20(g). This financial assistance will be available only to the extent necessary to enable such institutions to participate in the program.

(b) The State shall recommend funds for severe hardship applications wholly or partially from the funds reserved in accordance with § 455.30(d) and as stated in an approved State Plan.

(c) Applications for Federal funding in excess of the non-Federal share in the State plan pursuant to § 455.20(x) based on claims of severe hardship shall be given an additional evaluation by the State to assess on a quantifiable basis to the maximum extent practicable the relative need among eligible institutions. The minimum amount of additional Federal funding necessary for the applicant to participate in the program will be determined by the State in accordance with the procedures established in the State Plan. The primary consideration shall be the institution's inability to provide the non-Federal share of the project cost as specified in the State plan pursuant to § 455.20(x). Secondary criteria such as climate, fuel cost and fuel availability, borrowing capacity, median family income in the area, and other relevant factors as determined by the State may be addressed in the State Plan as specified in § 455.20(g).

(d) A State shall indicate, for those schools and hospitals with the highest rankings, determined pursuant to § 455.131(b) and (c):

(1) The amount of additional hardship funding requested by each eligible applicant for each building determined to be in a class of severe hardship and

(2) The amount of hardship funding recommended by the State based upon relative need, as determined in accordance with the State Plan, to the limit of the hardship funds available. The State must decide on a case-by-case basis whether, and to what extent, it will recommend hardship funding.

(e) If there are insufficient applications from hardship applicants to cover the 10 percent allocation provided for in § 455.30(d), then the State may recommend use of the remaining funds for other qualified applicants. The total amount recommended for hardship grants cannot exceed the 10 percent limit.