§ 1962. Loan determination factors; written credit declinations

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1961

   Agricultural Act of 1961

   Pub. L. 87–128 title III § 322 · 75 Stat. 294

   Enacted · 7 U.S.C. § 1962

   Pub. L. 87–128, title III, § 322, Aug. 8, 1961, 75 Stat. 311

   Source evidence

   Code source credit
   Pub. L. 87–128, title III, § 322, Aug. 8, 1961, 75 Stat. 311

   Enacted provision · exact public law section
   Sec. 322. Loans may be made under this subtitle for any of the purposes authorized for loans under subtitle A or B of this title.

2. 1975

   Pub. L. 94–68 § 4 · 89 Stat. 381

   Changed · 7 U.S.C. § 1962

   Pub. L. 94–68 extended authority to finance crop or livestock changes deemed desirable as a result of changes in market demand, and to make emergency loans in excess of the actual loss sustained as a result of the natural disaster

   Source evidence

   Code amendment note
   Pub. L. 94–68 extended authority to finance crop or livestock changes deemed desirable as a result of changes in market demand, and to make emergency loans in excess of the actual loss sustained as a result of the natural disaster.

   Enacted provision · exact public law section
   Sec. 4. Section 322 of the Act is amended to read: “Loans may be 7 USC 1962. made under this subtitle for any of the purposes authorized for loans under subtitle A or B of this title, as well as for crop or livestock changes deemed desirable by the applicant: Provided, That such loans may include, but are not limited to, the amount of the actual loss sustained as a result, of the disaster.”.

3. 1980

   Pub. L. 96–438 § 3(b)(1) · 94 Stat. 1871

   Substituted · 7 U.S.C. § 1962

   Pub. L. 96–438 substituted provisions prescribing factors to be considered in determining whether to make or insure a loan and relating to the need for applicants unable to obtain sufficient credit elsewhere to provide written credit declinations for provisions relating to the purpose and extent of loans under this subchapter

   Source evidence

   Code amendment note
   Pub. L. 96–438 substituted provisions prescribing factors to be considered in determining whether to make or insure a loan and relating to the need for applicants unable to obtain sufficient credit elsewhere to provide written credit declinations for provisions relating to the purpose and extent of loans under this subchapter.

   Enacted provision · exact public law section
   (1) amending sections 321, 322, 323, and 324 to read as follows: “Sec. 321. (a) The Secretary shall make and insure loans under this subtitle to (1) established farmers, ranchers, or persons engaged in aquaculture, who are citizens of the United States, and (2) farm cooperatives or private domestic corporations or partnerships in which a majority interest is held by members, stockholders, or partners who are citizens of the United States if the cooperative, corporation, or partnership is engaged primarily in farming, ranching, or aquaculture, where the Secretary finds that the applicants’ farming, ranching, or aquaculture operations have been substantially affected by a natural disaster in the United States or by a major disaster or emergency designated by the President under the Disaster 42 USC 5121 note. Relief Act of 1974: Provided, That they have experience and resources necessary to assure a reasonable prospect for successful operation with the assistance of such loan and are not able to obtain sufficient credit elsewhere. “(b) Notwithstanding the credit elsewhere requirements of 7 USC 1983. subsection (a) of this section and section 333(a) of this title, the Secretary shall implement a program under which the Secretary may make or insure loans under this subtitle to applicants able to obtain sufficient credit elsewhere, subject to the other terms and conditions for loans made or insured under this subtitle and such other terms and conditions as the Secretary may, by regulation, prescribe. “(c) The Secretary shall conduct the emergency loan program Family farm system. under this subtitle in a manner that will foster and encourage the family farm system of agriculture, consistent with the reaffirmation of policy and declaration of the intent of Congress contained in section 102(a) of the Food and Agriculture Act of 1977. 7 USC 2266. “(d) For the purposes of this subtitle— Definitions. “(1) ‘aquaculture’ means the husbandry of aquatic organisms under a controlled or selected environment; and “(2) ‘able to obtain sufficient credit elsewhere’ means able to obtain sufficient credit elsewhere to finance the applicant’s actual needs at reasonable rates and terms, taking into consideration prevailing private and cooperative rates and terms in the community in or near which the applicant resides for loans for similar purposes and periods of time. “Sec. 322. (a) For the purpose of determining whether to make or Loan determination factors. 7 USC 1962. insure any loan under this subtitle, the Secretary shall take into consideration the net worth of the applicant involved, including all the assets and liabilities of the applicant. “(b) For the purpose of determining whether an applicant under Written credit declination. this subtitle is not able to obtain sufficient credit elsewhere, the Secretary shall require at least one written indication of declination of credit, from a legally organized lending institution within reasonable proximity to the applicant, that specifies the reasons for the declination: Provided, That for loans in excess of $300,000, the Secretary shall require at least two such written declinations: Provided further, That for loans of $300,000 or less, the Secretary may waive the requirement of this subsection if the Secretary determines that it would impose an undue burden on the applicant. “Sec. 323. Loans may be made or insured under this subtitle for any Loans, extent. 7 USC 1963. 7 USC 1922, 1941. purpose authorized for loans under subtitle A or B of this title and for crop or livestock changes deemed desirable by the applicant, subject to the limitations on the amounts of loans provided in section 324(a) of this title. “Sec. 324. (a) (1) Except as otherwise provided in paragraph (2) of Loan limitation. 7 USC 1964. this subsection, no loan made or insured under this subtitle may exceed the amount of the actual loss caused by the disaster or $500,000, whichever is less, for each disaster. “(2) Through September 30, 1982, loans may be made or insured Excess loan amounts. under this subtitle in amounts in excess of the amount of actual loss (as limited under paragraph (1) of this subsection) to applicants who are not able to obtain sufficient credit elsewhere, within the following limits: “(A) Through the end of fiscal year 1980, no such loan may be made or insured in an amount that would cause the total unpaid principal indebtedness of the applicant for loans or portions of loans in excess of the amount of actual loss to exceed $1,500,000; “(B) During fiscal year 1981, no such loan may be made or insured in an amount that would cause the total unpaid principal indebtedness of the applicant for loans or portions of loans in excess of the amount of actual loss to exceed $1,000,000; “(C) During fiscal year 1982, no such loan may be made or insured in an amount that would cause the total unpaid principal indebtedness of the applicant for loans or portions of loans in excess of the amount of actual loss to exceed $500,000; and “(D) No loan or portion of a loan in excess of the amount of actual loss that is for more than $300,000 may be made or insured under this subtitle unless the Secretary determines that the applicant is not able to obtain from a private or cooperative lending agency a loan guaranteed by the Secretary under this subtitle sufficient to finance the applicant’s actual needs at reasonable rates and terms (taking into consideration prevailing private and cooperative rates and terms in the community in or near which the applicant resides for loans for similar purposes and periods of time). “(b) Loans under this subtitle shall be at rates of interest as follows: “(1) For loans or portions of loans up to the amount of the applicant’s actual loss caused by the disaster, as limited under subsection (a)(1) of this section, the interest shall be at rates prescribed by the Secretary, but (A) if the applicant is not able to obtain sufficient credit elsewhere, not in excess of 5 per centum per annum, and (B) if the applicant is able to obtain sufficient credit elsewhere, not in excess of the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of such loans, plus an additional charge of not to exceed 1 per centum per annum as determined by the Secretary, and adjusted to the nearest one-eighth of 1 per centum; and “(2) For loans or portions of loans in excess of the amount of the applicant’s actual loss caused by the disaster, as limited under subsection (a)(1) of this section, (A) the interest for insured loans shall be at rates prevailing in the private market for similar loans, as determined by the Secretary, and (B) the interest for guaranteed loans shall be at rates agreed on by the borrower and lender, but not in excess of such rates as may be determined by the Secretary. “(c) For guaranteed loans under this subtitle, the Secretary may pay interest subsidies to the lenders for those portions of the loans up to the amount of the actual loss caused by the disaster, as limited under subsection (a)(1) of this section. Any such subsidy shall not exceed the difference between the interest rate being charged for loans up to the amount of the actual loss, as established under subsection (b)(1) of this section, and the maximum interest rate for guaranteed loans, as established under subsection (b)(2) of this section. “(d) All loans under this subtitle shall be repayable at such times as the Secretary may determine, taking into account the purposes of the loan and the nature and effect of the disaster, but not later than as provided for loans for similar purposes under subtitles A and B of this 7 USC 1922, 1941. Security. title, and upon the full personal liability of the borrower and upon the best security available, as the Secretary may prescribe: Provided, That the security is adequate to assure repayment of the loans, except that if such security is not available because of the disaster, the Secretary shall (1) accept as security such collateral as is available, a portion or all of which may have depreciated in value due to the disaster and which in the opinion of the Secretary, together with the Secretary’s confidence in the repayment ability of the applicant, is adequate security for the loan, and (2) make such loan repayable at such times as the Secretary may determine, not later than as provided under subtitles A and B of this title, as justified by the needs 7 USC 1922, 1941. Repayment period, extension. of the applicant: Provided further, Review: non-Federal loans That for any disaster occurring after January 1, 1975, the Secretary, if the loan is for a purpose described in subtitle B of this title, may make the loan repayable at the end of a period of more than seven years, but not more than twenty years, if the Secretary determines that the need of the loan applicant justifies such a longer repayment period: Provided further, That for any direct or insured loan (other than a guaranteed loan) approved under section 321(b) of this title, three years after the loan Ante, p. 1872. is made or insured, and every two years thereafter for the term of the loan, the Secretary shall review the loan; and if, based on such review, the Secretary determines that the borrower is able to obtain a loan from non-Federal sources at reasonable rates and terms for loans for similar purposes and periods of time, the borrower shall on request by the Secretary, apply for and accept such non-Federal loan in sufficient amount to repay the Secretary. “(e) Any political subdivision of a State with a population of less Grant eligibility. than ten thousand inhabitants that, if such subdivision had a population of ten thousand or more inhabitants, would be eligible for a grant under the first title of the Community Emergency Drought Relief Act of 1977 shall be eligible for a grant under the Consolidated Farm and 42 USC 5184 note. 7 USC 1921 note. Rural Development Act during any period in which the Community Emergency Drought Relief Act of 1977 is or has been in effect.”; and

4. 1996

   Federal Agriculture Improvement and Reform Act of 1996

   Pub. L. 104–127 title VI § 622 · 110 Stat. 888

   Substituted · 7 U.S.C. § 1962(b)

   Pub. L. 104–127 substituted “loans of $100,000 or less” for “loans of $300,000 or less”

   Source evidence

   Code amendment note
   Subsec. (b). Pub. L. 104–127 substituted “loans of $100,000 or less” for “loans of $300,000 or less”.

   Enacted provision · exact public law section
   SEC. 622. NARROWING OF AUTHORITY TO WAIVE APPLICATION OF THE CREDIT ELSEWHERE TEST. The second proviso of section 322(b) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1962(b)) is amended by striking “$300,000 or less” and inserting “$100,000 or less”.

   Effective date note
   Amendment by Pub. L. 104–127 effective 90 days after Apr. 4, 1996, see section 663(b) of Pub. L. 104–127, set out as a note under section 1922 of this title.

4 of 4 references resolved to an enrolled provision