7 U.S.C. § 1964 — Terms of loans

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 Page 1119 TITLE 7—AGRICULTURE § 1964 to pledge available collateral on request by the Secretary. (e) Grant eligibility Any political subdivision of a State with a population of less 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 Commu- nity Emergency Drought Relief Act of 1977 shall be eligible for a grant under this chapter during any period in which the Community Emergency Drought Relief Act of 1977 is or has been in ef- fect. (Pub. L. 87–128, title III, § 324, Aug. 8, 1961, 75 Stat. 311; Pub. L. 93–24, § 4, Apr. 20, 1973, 87 Stat. 25; Pub. L. 94–68, § 5, Aug. 5, 1975, 89 Stat. 381; Pub. L. 95–89, title IV, § 406, Aug. 4, 1977, 91 Stat. 561; Pub. L. 95–334, title I, § 119, Aug. 4, 1978, 92 Stat. 427; Pub. L. 96–302, title I, § 120(b), July 2, 1980, 94 Stat. 841; Pub. L. 96–438, § 3(a), (b)(1), Oct. 13, 1980, 94 Stat. 1872, 1873; Pub. L. 97–35, title I, § 162(a), Aug. 13, 1981, 95 Stat. 378; Pub. L. 98–258, title VI, § 602(b), Apr. 10, 1984, 98 Stat. 138; Pub. L. 99–198, title XIII, § 1308(b)(3), (c), Dec. 23, 1985, 99 Stat. 1523; Pub. L. 100–707, title I, § 109(c)(2), Nov. 23, 1988, 102 Stat. 4708; Pub. L. 104–127, title VI, §§ 624, 625, Apr. 4, 1996, 110 Stat. 1091; Pub. L. 105–277, div. A, § 101(a) [title VIII, § 802], Oct. 21, 1998, 112 Stat. 2681, 2681–38.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in subsecs. (d) and (e), was in the original ‘‘this title’’, meaning title III of Pub. L. 87–128, Aug. 8, 1961, 75 Stat. 307, known as the Consoli- dated Farm and Rural Development Act, which is clas- sified principally to this chapter. For complete classi- fication of title III to the Code, see Short Title note set out under section 1921 of this title and Tables. The Robert T. Stafford Disaster Relief and Emer- gency Assistance Act, referred to in subsec. (d), is Pub. L. 93–288, May 22, 1974, 88 Stat. 143, which is classified principally to chapter 68 (§ 5121 et seq.) of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short Title note set out under section 5121 of Title 42 and Tables. The Community Emergency Drought Relief Act of 1977, referred to in subsec. (e), is Pub. L. 95–31, May 23, 1977, 91 Stat. 169. Title I of the Community Emergency Drought Relief Act of 1977 is set out as a note under section 5184 of Title 42. For complete classification of this Act to the Code, see Tables. AMENDMENTS 1998—Subsec. (d). Pub. L. 105–277 inserted heading, designated existing provisions as par. (1) and inserted heading, and added par. (2). 1996—Pub. L. 104–127, § 624, inserted section catchline. Subsec. (a). Pub. L. 104–127, § 624, added subsec. (a) and struck out former subsec. (a) which read as follows: ‘‘No loan made or insured under this subchapter may exceed the amount of the actual loss caused by the dis- aster or $500,000, whichever is less, for each disaster.’’ Subsec. (d). Pub. L. 104–127, § 625, in last sentence, substituted ‘‘establish the value of the assets as of the day before the occurrence of the natural disaster, major disaster, or emergency that is the basis for a re- quest for assistance under this subchapter or the Rob- ert T. Stafford Disaster Relief and Emergency Assist- ance Act (42 U.S.C. 5121 et seq.).’’ for ‘‘value the assets based on the higher of (A) the value of the assets on the day before the date the governor of the State in which the farm is located requests assistance under this sub- chapter or the Disaster Relief and Emergency Assist- ance Act for any portion of such State affected by the disaster with respect to which the application for the loan is made, or (B) the value of the assets one year be- fore such day.’’ 1988—Subsec. (d). Pub. L. 100–707 substituted ‘‘and Emergency Assistance Act’’ for ‘‘Act of 1974’’. 1985—Subsec. (a). Pub. L. 99–198, § 1308(c), in amending subsec. (a) generally, struck out par. (1) designation, substituted ‘‘No loan’’ for ‘‘Except as otherwise pro- vided in paragraph (2) of this subsection, no loan’’, and struck out par. (2) authorization of loans through Sept. 30, 1982 for applicants unable to obtain sufficient credit elsewhere, limited to an amount that would not cause the total unpaid principal indebtedness of the loan ap- plicant to exceed: $1,500,000 through end of fiscal year 1980; $1,000,000 during fiscal year 1981; and $500,000 dur- ing fiscal year 1982; and restricted loans in excess of amount of actual loss that were for more than $300,000 without a prior determination of the Secretary of ap- plicant’s inability to obtain loans to finance actual needs at reasonable rates and terms in the residential community of the applicant for loans for similar pur- poses and periods of time. Subsec. (b)(1). Pub. L. 99–198, § 1308(b)(3), substituted provision for interest rates prescribed by the Secretary but ‘‘not in excess of 8 percent per annum’’ for former such provision but ‘‘(A) if the applicant is not able to obtain sufficient credit elsewhere, not in excess of 8 per centum per annum, and (B) if the applicant is able to obtain sufficient credit elsewhere, not in excess of the rate prevailing in the private market for similar loans, as determined by the Secretary’’. 1984—Subsec. (d). Pub. L. 98–258 inserted provision that, if farm assets (including land, livestock, and equipment) are used as collateral to secure a loan made under this subchapter, the Secretary shall value the as- sets based on the higher of (A) the value of the assets on the day before the date the governor of the State in which the farm is located requests assistance under this subchapter or the Disaster Relief Act of 1974 for any portion of such State affected by the disaster with respect to which the application for the loan is made, or (B) the value of the assets one year before such day. 1981—Subsec. (b)(1). Pub. L. 97–35 in cl. (A) increased amount from 5 to 8 per centum, and in cl. (B) sub- stituted provisions relating to a rate not in excess of the rate prevailing in the private market for similar loans, for provisions relating to a rate not in excess of current average market yield on outstanding United States marketable obligations, plus additional charges and adjustments. 1980—Subsec. (a). Pub. L. 96–348, § 3(a), (b)(1), repealed section 120 of Pub. L. 96–302 (see par. below) and amend- ed subsec. (a) generally, substituting provisions relat- ing to the limitation on loans made or insured under this subchapter and authorizing excess loan amounts for provisions relating to the interest rates, maturity and security of loans made or insured under this chap- ter. Pub. L. 96–302, § 120(b) (see par. above), substituted in- terest rate provisions of first sentence for prior provi- sion for loans ‘‘(1) at a rate of interest not in excess of 5 per centum per annum on loans up to the amount of the actual loss caused by the disaster, and (2) for any loans or portions of loans in excess of that amount, the interest rate will be that prevailing in the private mar- ket for similar loans, as determined by the Secretary’’ and inserted proviso in second sentence for repayment of subsec. (a)(1)(B) loans. Subsec. (b). Pub. L. 96–438, § 3(b)(1), substituted provi- sions relating to interest rates on loans made or in- sured under this subchapter for provisions relating to eligibility of political subdivisions of states for grants under this chapter. Subsecs. (c) to (e). Pub. L. 96–438, § 3(b)(1), added sub- secs. (c) to (e). 1978—Subsecs. (b), (c). Pub. L. 95–334 redesignated subsec. (c) as (b). Former subsec. (b), which related to reductions in the interest rate based on interest rate of the Small Business Administration, was struck out. Page 1120 TITLE 7—AGRICULTURE § 1965 1 See References in Text note below. 1977—Subsec. (a). Pub. L. 95–89 designated existing provisions as subsec. (a) and struck out last proviso prescribing for any loan made by the Small Business Administration in connection with a disaster occurring on or after Aug. 5, 1975, under section 636(b)(1), (2), or (4) of title 15 a rate of interest determined in the first paragraph following section 636(b)(8) of title 15 for loans under paragraphs (3), (5), (6), (7), or (8) of section 636(b) of title 15, now covered in subsec. (b) of this section. Subsecs. (b), (c). Pub. L. 95–89 added subsecs. (b) and (c). 1975—Pub. L. 94–68 made the existing rate of 5 percent applicable to loans up to the amount of the actual loss caused by the disaster, inserted provisions that for loans or portions of loans in excess of that amount the interest rate will be that prevailing in the private mar- ket for similar loans, as determined by the Secretary, and inserted provisos relating to security, disasters oc- curring after Jan. 1, 1975, and loans made by Small Business Administration. 1973—Pub. L. 93–24 substituted ‘‘5’’ for ‘‘3’’ per cen- tum. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1996 AMENDMENT Amendment by section 624 of Pub. L. 104–127 effective Apr. 4, 1996, and amendment by section 625 of Pub. L. 104–127 effective 90 days after Apr. 4, 1996, see section 663(a), (b) of Pub. L. 104–127, set out as a note under sec- tion 1922 of this title. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98–258 applicable to disasters occurring after May 30, 1983, see section 602(c) of Pub. L. 98–258, set out as a note under section 1961 of this title. EFFECTIVE DATE OF 1981 AMENDMENT Section 162(b) of Pub. L. 97–35 provided that: ‘‘The amendments made by this section [amending this sec- tion] shall apply to loans made with respect to disas- ters occurring after September 30, 1981’’. EFFECTIVE DATE OF 1980 AMENDMENTS Amendment by section 3(b)(1) of Pub. L. 96–438 effec- tive with respect to loans approved after Oct. 13, 1980, except for certain subsequent emergency loans, see sec- tion 3(d) of Pub. L. 96–438, set out as a note under sec- tion 1961 of this title. 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 1978 AMENDMENT Pub. L. 95–334, title I, § 119, Aug. 4, 1978, 92 Stat. 427, provided that the amendment made by that section is effective Oct. 1, 1978. SMALL BUSINESS DISASTER LOANS; INTEREST RATE; CANCELLATION OF LOANS Loans by Small Business Administration in connec- tion with any disaster occurring on or after Apr. 20, 1973 made under section 636(b)(1), (2), or (4) of Title 15, as subject to interest rate determined under this sec- tion and prohibition against cancellation of such loan under any provision of law, see section 9 of Pub. L. 93–24, set out as a note under section 636 of Title 15, Commerce and Trade. § 1965. Repealed. Pub. L. 95–334, title I, § 120, Aug. 4, 1978, 92 Stat. 427 Section, Pub. L. 87–128, title III, § 325, Aug. 8, 1961, 75 Stat. 311; Pub. L. 94–68, § 6, Aug. 5, 1975, 89 Stat. 382, au- thorized delegation of authority to State Directors of Farmers Home Administration for making emergency loans. § 1966. Emergency Credit Revolving Fund utiliza- tion The Secretary is authorized to utilize the re- volving fund created by section 1148a 1 of title 12 (hereinafter in this subchapter referred to as the ‘‘Emergency Credit Revolving Fund’’) for car- rying out the purposes of this subchapter. (Pub. L. 87–128, title III, § 326, Aug. 8, 1961, 75 Stat. 312.) Editorial Notes REFERENCES IN TEXT Section 1148a of title 12, referred to in text, was re- pealed by Pub. L. 92–181, title V, § 5.26(a), Dec. 10, 1971, 85 Stat. 624. See section 2252 of Title 12, Banks and Banking. The Emergency Credit Revolving Fund, referred to in text, was abolished and its assets and liabilities trans- ferred to the Agricultural Credit Insurance Fund by section 1929 of this title. § 1967. Addition to Emergency Credit Revolving Fund of sums from liquidation of loans; au- thorization of appropriations (a) All sums received by the Secretary from the liquidation of loans made under the provi- sions of this subchapter or under the Act of April 6, 1949, as amended, or the Act of August 31, 1954, and from the liquidation of any other assets acquired with money from the Emergency Credit Revolving Fund shall be added to and be- come a part of such fund. (b) There are authorized to be appropriated to the Emergency Credit Revolving Fund such ad- ditional sums as the Congress shall from time to time determine to be necessary. (Pub. L. 87–128, title III, § 327, Aug. 8, 1961, 75 Stat. 312.) Editorial Notes REFERENCES IN TEXT Act of April 6, 1949, as amended, referred to in subsec. (a), is act Apr. 6, 1949, ch. 49, 63 Stat. 43, which was clas- sified to sections 1148a–1 to 1148a–3 of Title 12, Banks and Banking, was repealed by section 341(a) of Pub. L. 87–128, and is covered by this chapter. Act of August 31, 1954, referred to in subsec. (a), is act Aug. 31, 1954, ch. 1145, 68 Stat. 999, which was classified as a note under section 1148a–1 of Title 12, was repealed by section 341(a) of Pub. L. 87–128, and is covered by this chapter. ABOLITION OF EMERGENCY CREDIT REVOLVING FUND The Emergency Credit Revolving Fund, referred to in this section and in section 1966 of this title, was abol- ished and its assets and liabilities transferred to the Agricultural Credit Insurance Fund by section 1929 of this title. § 1968. Repealed. Pub. L. 104–127, title VI, § 626, Apr. 4, 1996, 110 Stat. 1092 Section, Pub. L. 87–128, title III, § 328, as added Pub. L. 92–173, Nov. 24, 1971, 85 Stat. 491; amended Pub. L. 93–24, § 5, Apr. 20, 1973, 87 Stat. 25; Pub. L. 95–334, title I, § 109(b), Aug. 4, 1978, 92 Stat. 423, related to insurance of loans.