7 U.S.C. § 1963 — Purpose and extent of loans

Page 1117 TITLE 7—AGRICULTURE § 1963 solidated Farm and Rural Development Act made by subsection (b) of this section [amending this section and sections 1962 to 1964 and 1971 of this title] shall be effective with respect to loans approved by the Sec- retary of Agriculture under subtitle C [this subchapter] after the date of enactment of this Act [Oct. 13, 1980], except that, for borrowers with loans outstanding under subtitle C as of December 15, 1979— ‘‘(1) the limits on loans under section 324 of the Consolidated Farm and Rural Development Act [sec- tion 1964 of this title] made by subsection (b)(1) of this section [amending this section and sections 1962 to 1964 of this title], and ‘‘(2) the reduction in the time limit on subsequent emergency loans under section 330 of the Consoli- dated Farm and Rural Development Act [section 1971 of this title] made by subsection (b)(2) of this section [amending section 1971 of this title] shall not apply to subsequent emergency loans under section 330 (as in effect on the date preceding the date of enactment of this Act) that are made to such bor- rowers for the disasters for which the borrowers ob- tained loans under subtitle C prior to December 16, 1979.’’ Amendment by Pub. L. 96–302 effective Oct. 1, 1980, see section 507 of Pub. L. 96–302, set out as a note under section 631 of Title 15, Commerce and Trade. EFFECTIVE DATE OF 1974 AMENDMENT Pub. L. 93–237, § 10(b), Jan. 2, 1974, 87 Stat. 1025, pro- vided that: ‘‘The provisions of subsection (a) of this sec- tion [amending this section] shall be given effect with respect to all loan applications and loans made in con- nection with a disaster occurring on or after April 20, 1973.’’ Pub. L. 93–237, § 10(d), Jan. 2, 1974, 87 Stat. 1025, pro- vided in part that: ‘‘The provisions of this subsection [amending this section] shall be given effect with re- spect to all loan applications and loans made in con- nection with a disaster occurring on or after December 27, 1972.’’ INELIGIBILITY FOR EMERGENCY LOANS Pub. L. 101–82, title III, § 301, Aug. 14, 1989, 103 Stat. 581, provided that: ‘‘Section 321(b) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1961(b)) shall not apply to a person who otherwise would be eli- gible for an emergency loan under subtitle C of such Act [7 U.S.C. 1961 et seq.], if such eligibility is the re- sult of damage to an annual crop planted for harvest in 1989.’’ Similar provisions were contained in the following prior act: Pub. L. 100–387, title III, § 311, Aug. 11, 1988, 102 Stat. 948. NINETY-DAY EXTENSION AFTER JANUARY 2, 1974, OF DEADLINE FOR SEEKING ASSISTANCE WITH REGARD TO DISASTERS OCCURRING ON OR AFTER DECEMBER 27, 1972 Pub. L. 93–237, § 10(c), Jan. 2, 1974, 87 Stat. 1025, pro- vided that: ‘‘With regard to all disasters occurring on or after December 27, 1972, the Secretary of Agriculture shall extend for ninety days after the date of enact- ment of this section [Jan. 2, 1974] the deadline for seek- ing assistance under section 321 of the Consolidated Farm and Rural Development Act [this section] as amended by this section [amending this section].’’ § 1962. Loan determination factors; written cred- it declinations (a) For the purpose of determining whether to make or insure any loan under this subchapter, 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 this subchapter 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 ex- cess of $300,000, the Secretary shall require at least two such written declinations: Provided further, That for loans of $100,000 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. (Pub. L. 87–128, title III, § 322, Aug. 8, 1961, 75 Stat. 311; Pub. L. 94–68, § 4, Aug. 5, 1975, 89 Stat. 381; Pub. L. 96–438, § 3(b)(1), Oct. 13, 1980, 94 Stat. 1873; Pub. L. 104–127, title VI, § 622, Apr. 4, 1996, 110 Stat. 1091.) Editorial Notes AMENDMENTS 1996—Subsec. (b). Pub. L. 104–127 substituted ‘‘loans of $100,000 or less’’ for ‘‘loans of $300,000 or less’’. 1980—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 ap- plicants unable to obtain sufficient credit elsewhere to provide written credit declinations for provisions relat- ing to the purpose and extent of loans under this sub- chapter. 1975—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. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1996 AMENDMENT 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. EFFECTIVE DATE OF 1980 AMENDMENT Amendment by Pub. L. 96–438 effective with respect to loans approved after Oct. 13, 1980, except for certain subsequent emergency loans, see section 3(d) of Pub. L. 96–438, set out as a note under section 1961 of this title. § 1963. Purpose and extent of loans Loans may be made or insured under this sub- chapter for any purpose authorized for loans under subchapter I or II of this chapter and for crop or livestock changes that are necessitated by a quarantine, natural disaster, major dis- aster, or emergency and that are deemed desir- able by the applicant, subject to the limitations on the amounts of loans provided in section 1964(a) of this title. (Pub. L. 87–128, title III, § 323, Aug. 8, 1961, 75 Stat. 311; Pub. L. 96–438, § 3(b)(1), Oct. 13, 1980, 94 Stat. 1873; Pub. L. 104–127, title VI, § 623, Apr. 4, 1996, 110 Stat. 1091; Pub. L. 107–171, title V, § 5201(b), May 13, 2002, 116 Stat. 344.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in text, was in the original ‘‘this title’’, meaning title III of Pub. L. 87–128, Aug. 8, 1961, 75 Stat. 307, known as the Consolidated Farm and Rural Development Act, which is classified principally to this chapter. For complete classification of title III Page 1118 TITLE 7—AGRICULTURE § 1964 to the Code, see Short Title note set out under section 1921 of this title and Tables. AMENDMENTS 2002—Pub. L. 107–171 inserted ‘‘quarantine,’’ before ‘‘natural disaster’’. 1996—Pub. L. 104–127 inserted ‘‘that are necessitated by a natural disaster, major disaster, or emergency and that are’’ after ‘‘livestock changes’’. 1980—Pub. L. 96–438 substituted provisions relating to the purposes and extent of loans made or insured under this subchapter for provisions limiting loans to amounts certified by the county committee. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1996 AMENDMENT 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. EFFECTIVE DATE OF 1980 AMENDMENT Amendment by Pub. L. 96–438 effective with respect to loans approved after Oct. 13, 1980, except for certain subsequent emergency loans, see section 3(d) of Pub. L. 96–438, set out as a note under section 1961 of this title. § 1964. Terms of loans (a) Maximum amount of loan The Secretary may not make a loan under this subchapter to a borrower who has suffered a loss in an amount that— (1) exceeds the actual loss caused by a dis- aster; or (2) would cause the total indebtedness of the borrower under this subchapter to exceed $500,000. (b) Interest rates Loans under this subchapter 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 not in excess of 8 percent per annum; 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 sub- section (a)(1) of this section, (A) the interest for insured loans shall be at rates prevailing in the private market for similar loans, as deter- mined by the Secretary, and (B) the interest for guaranteed loans shall be at rates agreed on by the borrower and lender, but not in ex- cess of such rates as may be determined by the Secretary. (c) Interest subsidies For guaranteed loans under this subchapter, 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 es- tablished 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) Repayment (1) In general All loans under this subchapter shall be re- payable 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 subchapters I and II of this chapter, and upon the full per- sonal liability of the borrower and upon the best security available, as the Secretary may prescribe: Provided, That the security is ade- quate 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 abil- ity 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 subchapters I and II of this chapter, as justified by the needs of the applicant: Provided further, That for any disaster occurring after January 1, 1975, the Secretary, if the loan is for a purpose de- scribed in subchapter II of this chapter, 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 1961(b) of this title, three years after the loan is made or insured, and every two years there- after for the term of the loan, the Secretary shall review the loan; and if, based on such re- view, the Secretary determines that the bor- rower is able to obtain a loan from non-Fed- eral sources at reasonable rates and terms for loans for similar purposes and periods of time, the borrower shall on request by the Sec- retary, apply for and accept such non-Federal loan in sufficient amount to repay the Sec- retary. If farm assets (including land, live- stock, and equipment) are used as collateral to secure a loan made under this subchapter, the Secretary shall establish the value of the as- sets as of the day before the occurrence of the natural disaster, major disaster, or emergency that is the basis for a request for assistance under this subchapter or the Robert T. Staf- ford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.). (2) No basis for denial of loan (A) In general Subject to subparagraph (B), the Secretary shall not deny a loan under this subchapter to a borrower by reason of the fact that the borrower lacks a particular amount of col- lateral for the loan if the Secretary is rea- sonably certain that the borrower will be able to repay the loan. (B) Refusal to pledge available collateral The Secretary may deny or cancel a loan under this subchapter if a borrower refuses