7 U.S.C. § 1946 — Liability of borrower

Page 1111 TITLE 7—AGRICULTURE § 1946 1 See References in Text note below. L. 110–234 were repealed by section 4(a) of Pub. L. 110–246. AMENDMENTS 2018—Subsec. (a)(1). Pub. L. 115–334, § 5201(1), sub- stituted ‘‘$400,000’’ for ‘‘$300,000’’, ‘‘$1,750,000’’ for ‘‘$700,000’’, and ‘‘2019’’ for ‘‘2000’’. Subsec. (b)(1). Pub. L. 115–334, § 5201(2)(A), substituted ‘‘July’’ for ‘‘August’’. Subsec. (b)(2). Pub. L. 115–334, § 5201(2)(B), substituted ‘‘that immediately precedes the 12-month period de- scribed in paragraph (1)’’ for ‘‘ending on August 31, 1996’’. Subsec. (c)(2). Pub. L. 115–334, § 5202, substituted ‘‘sub- section to any 1 borrower’’ for ‘‘chapter to any 1 bor- rower’’. Subsec. (c)(4)(A). Pub. L. 115–334, § 5203, substituted ‘‘2023’’ for ‘‘2018’’ in introductory provisions. 2014—Subsec. (c). Pub. L. 113–79 added subsec. (c). 2008—Subsec. (a)(1). Pub. L. 110–246, § 5102, substituted ‘‘$300,000’’ for ‘‘$200,000’’. 1998—Pub. L. 105–277 inserted section catchline, des- ignated existing provisions as subsec. (a), inserted heading, substituted ‘‘this subchapter—’’ for ‘‘this sub- chapter’’, in introductory provisions, realigned margin of par. (1) and substituted ‘‘$700,000 (increased, begin- ning with fiscal year 2000, by the inflation percentage applicable to the fiscal year in which the loan is guar- anteed and reduced by the unpaid indebtedness of the borrower on loans under the sections specified in sec- tion 1925 of this title that are guaranteed by the Sec- retary); or’’ for ‘‘$400,000; or’’, realigned margin of par. (2), and added subsec. (b). 1984—Pub. L. 98–258 substituted ‘‘$200,000’’ and ‘‘$400,000’’ for ‘‘$100,000’’ and ‘‘$200,000’’, respectively. 1978—Pub. L. 95–334 substituted provisions setting forth criteria for Secretary to make or insure loans under this subchapter for provisions setting forth cri- teria for Secretary to make loans under this sub- chapter. 1972—Pub. L. 92–419 substituted ‘‘$50,000’’ for ‘‘$35,000’’. 1968—Pub. L. 90–488 struck out from item (1) the pro- viso which limited the amount to be used for loans which would cause the indebtedness of any borrower to exceed $15,000 to 25 per centum of the sums made avail- able for loans. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2008 AMENDMENT Amendment of this section and repeal of Pub. L. 110–234 by Pub. L. 110–246 effective May 22, 2008, the date of enactment of Pub. L. 110–234, see section 4 of Pub. L. 110–246, set out as an Effective Date note under section 8701 of this title. § 1944. Soil conservation district loans; limita- tion; purchase of conservation equipment Loans aggregating not more than $500,000 in any one year may also be made to soil conserva- tion districts which cannot obtain necessary credit elsewhere upon reasonable terms and con- ditions for the purchase of equipment custom- arily used for soil conservation purposes. (Pub. L. 87–128, title III, § 314, Aug. 8, 1961, 75 Stat. 311.) § 1945. Repealed. Pub. L. 104–127, title VI, § 613, Apr. 4, 1996, 110 Stat. 1089 Section, Pub. L. 87–128, title III, § 315, Aug. 8, 1961, 75 Stat. 311, authorized Secretary to participate in certain loans made under this subchapter. § 1946. Liability of borrower (a) Determination of interest rates (1) The Secretary shall make all loans under this subchapter upon the full personal liability of the borrower and upon such security as the Secretary may prescribe. The interest rates on such loans, except for guaranteed loans and loans as provided in paragraphs (2) and (3),1 shall be as determined by the Secretary, but not in excess of the current average market yield on outstanding marketable obligations of the United States with remaining periods to matu- rity comparable to the average maturities of such loans, plus an additional charge not to ex- ceed 1 per centum as determined by the Sec- retary, which charge shall be deposited in the Rural Development Insurance Fund or the Agri- cultural Credit Insurance Fund, as appropriate, and adjusted to the nearest one-eighth of 1 per centum. The interest rate on any guaranteed loan made under this subchapter shall be such rate as may be agreed upon by the borrower and lender, but not in excess of a rate as may be de- termined by the Secretary. (2) The interest rate on a microloan to a be- ginning farmer or rancher or veteran farmer or rancher (as defined in section 2279(e) 1 of this title), or any loan (other than a guaranteed loan) to a low income, limited resource borrower under this subchapter shall not be— (A) greater than the sum of— (i) an amount that does not exceed one- half of the current average market yield on outstanding marketable obligations of the United States with maturities of 5 years; and (ii) an amount not exceeding 1 percent per year, as the Secretary determines is appro- priate; or (B) less than 5 percent per year. (b) Payment period; consolidation and resched- uling of loans Loans made under this subchapter shall be payable in not to exceed seven years. The Sec- retary may consolidate or reschedule out- standing loans for payment over a period not to exceed seven years (or, in the case of loans for farm operating purposes, fifteen years) from the date of such consolidation or rescheduling, and the amount of unpaid principal and interest of the prior loans so consolidated or rescheduled shall not create a new charge against any loan levels authorized by law. A new loan may be in- cluded in a consolidation. Such new loan shall be charged against any loan level authorized by law. Except as otherwise provided for farm loans under section 1981b of this title, the interest rate on such consolidated or rescheduled loans, other than guaranteed loans, may be changed by the Secretary to a rate not to exceed the rate being charged for loans made under this sub- chapter at the time of the consolidation or re- scheduling. The interest rate on any guaranteed loan under this subchapter that may be consoli- dated or rescheduled for payment shall be such rate as may be agreed upon by the borrower and the lender, but not in excess of a rate as may be determined by the Secretary. Page 1112 TITLE 7—AGRICULTURE §§ 1947, 1948 (c) Line-of-credit loans (1) In general A loan made or guaranteed by the Secretary under this subchapter may be in the form of a line-of-credit loan. (2) Term A line-of-credit loan under paragraph (1) shall terminate not later than 5 years after the date that the loan is made or guaranteed. (3) Eligibility For purposes of determining eligibility for a farm operating loan under this subchapter, each year during which a farmer or rancher takes an advance or draws on a line-of-credit loan the farmer or rancher shall be considered to have received an operating loan for 1 year. (4) Termination of delinquent loans If a borrower does not pay an installment on a line-of-credit loan on schedule, the borrower may not take an advance or draw on the line- of-credit, unless the Secretary determines that— (A) the borrower’s failure to pay on sched- ule was due to unusual conditions that the borrower could not control; and (B) the borrower will reduce the line-of- credit balance to the scheduled level at the end of— (i) the production cycle; or (ii) the marketing of the borrower’s agri- cultural products. (5) Agricultural commodities A line-of-credit loan may be used to finance the production or marketing of an agricul- tural commodity that— (A) is eligible for a price support program of the Department of Agriculture; or (B) was eligible for a price support pro- gram of the Department of Agriculture on the day before April 4, 1996. (Pub. L. 87–128, title III, § 316, Aug. 8, 1961, 75 Stat. 311; Pub. L. 90–488, § 10, Aug. 15, 1968, 82 Stat. 771; Pub. L. 95–334, title I, § 117, Aug. 4, 1978, 92 Stat. 426; Pub. L. 97–35, title I, § 160(b), Aug. 13, 1981, 95 Stat. 377; Pub. L. 98–258, title VI, § 604(b), Apr. 10, 1984, 98 Stat. 139; Pub. L. 101–624, title XVIII, § 1803(b), Nov. 28, 1990, 104 Stat. 3818; Pub. L. 104–127, title VI, §§ 614, 661(g), Apr. 4, 1996, 110 Stat. 1089, 1107; Pub. L. 113–79, title V, § 5106(b)(3), Feb. 7, 2014, 128 Stat. 838.) Editorial Notes REFERENCES IN TEXT Paragraph (3), referred to in subsec. (a)(1), was re- pealed by Pub. L. 104–127, title VI, § 661(g), Apr. 4, 1996, 110 Stat. 1107. Section 2279(e) of this title, referred to in subsec. (a)(2), was redesignated section 2279(a) of this title by section 12301(b)(3) of Pub. L. 115–334. AMENDMENTS 2014—Subsec. (a)(2). Pub. L. 113–79 inserted ‘‘a microloan to a beginning farmer or rancher or veteran farmer or rancher (as defined in section 2279(e) of this title), or’’ after ‘‘The interest rate on’’. 1996—Subsec. (a)(3). Pub. L. 104–127, § 661(g), struck out par. (3) which read as follows: ‘‘The interest rate on any loan (other than a guaranteed loan) made or in- sured under clause (5) of section 1942(a) of this title for activities that involve the use of prime farmland as de- fined in section 1927(a)(6)(C) of this title shall be the in- terest rate otherwise applicable under this section in- creased by 2 per centum per annum.’’ Subsec. (c). Pub. L. 104–127, § 614, added subsec. (c). 1990—Subsec. (a)(2). Pub. L. 101–624 amended par. (2) generally. Prior to amendment, par. (2) read as follows: ‘‘The interest rate on any loan (other than a guaran- teed loan) to a low-income, limited resource borrower under this subchapter shall be the interest rate other- wise applicable under this section reduced by 3 per cen- tum per annum.’’ 1984—Subsec. (b). Pub. L. 98–258 inserted ‘‘(or, in the case of loans for farm operating purposes, fifteen years)’’ and substituted ‘‘Except as otherwise provided for farm loans under section 1981b of this title, the in- terest rate’’ for ‘‘The interest rate’’. 1981—Subsec. (a). Pub. L. 97–35 redesignated existing provisions as par. (1), inserted reference to loans guar- anteed under pars. (2) and (3), and added pars. (2) and (3). 1978—Pub. L. 95–334 designated existing provisions as subsec. (a), inserted provisions relating to depositing of charges and provisions relating to interest rates on guaranteed loans, struck out provisions relating to payment and renewal of loans, and added subsec. (b). 1968—Pub. L. 90–488 substituted provisions for deter- mination of interest rate by taking into consideration current average market yield on outstanding market- able obligations of the United States with remaining periods to maturity comparable to the average matu- rities of the loans, adjusted to the nearest one-eighth of 1 per centum, plus not to exceed 1 per centum per annum as determined by the Secretary, for former pro- hibition of an interest rate exceeding 5 per centum per annum. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1981 AMENDMENT Amendment by Pub. L. 97–35 applicable to loans made after Sept. 30, 1981, see section 160(c) of Pub. L. 97–35, set out as a note under section 1927 of this title. §§ 1947, 1948. Repealed. Pub. L. 104–127, title VI, §§ 615, 616(a), Apr. 4, 1996, 110 Stat. 1090 Section 1947, Pub. L. 87–128, title III, § 317, as added Pub. L. 92–419, title I, § 123, Aug. 30, 1972, 86 Stat. 665, re- lated to insured operating loans. Section 1948, Pub. L. 87–128, title III, § 318, as added Pub. L. 102–554, § 8, Oct. 28, 1992, 106 Stat. 4146, related to special assistance to certain qualified beginning farmers and ranchers. § 1949. Graduation of borrowers with operating loans or guarantees to private commercial credit The Secretary shall establish a plan, in coordi- nation with activities under sections 2006a, 2006b, 2006c, and 2006d of this title, to encourage each borrower with an outstanding loan under this subchapter or with respect to whom there is an outstanding guarantee under this subchapter to graduate to private commercial or other sources of credit. (Pub. L. 87–128, title III, § 319, as added Pub. L. 102–554, § 9, Oct. 28, 1992, 106 Stat. 4150; amended Pub. L. 104–127, title VI, § 617, Apr. 4, 1996, 110 Stat. 1090; Pub. L. 113–79, title V, § 5107, Feb. 7, 2014, 128 Stat. 838.) Editorial Notes AMENDMENTS 2014—Pub. L. 113–79 struck out subsec. (a) designation and heading before ‘‘The Secretary’’ and struck out