United States Code (Last Updated: May 24, 2014) |
Title 7. AGRICULTURE |
Chapter 50. AGRICULTURAL CREDIT |
SubChapter III. EMERGENCY LOANS |
§ 1964. Terms of loans
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(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 disaster; 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 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) 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 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) Repayment (1) In general All loans under this subchapter 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 subchapters I and II of this chapter, 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 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 described 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 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. If farm assets (including land, livestock, and equipment) are used as collateral to secure a loan made under this subchapter, the Secretary shall 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 request for assistance under this subchapter or the Robert T. Stafford 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 collateral for the loan if the Secretary is reasonably 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 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 Community 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 effect.
References In Text
For definition of “this chapter”, referred to in subsecs. (d) and (e), see note set out under section 1921 of this title.
The Robert T. Stafford Disaster Relief and Emergency Assistance Act, referred to in subsec. (d), is Pub. L. 93–288,
The Community Emergency Drought Relief Act of 1977, referred to in subsec. (e), is Pub. L. 95–31,
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 disaster 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 request for assistance under this subchapter or the Robert T. Stafford Disaster Relief and Emergency Assistance 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 subchapter or the Disaster Relief and Emergency Assistance 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 before 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 provided in paragraph (2) of this subsection, no loan”, and struck out par. (2) authorization of loans through
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 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 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) substituted 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 amended subsec. (a) generally, substituting provisions relating 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 chapter.
Pub. L. 96–302, § 120(b) (see par. above), substituted interest rate provisions of first sentence for prior provision 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 market 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 provisions relating to interest rates on loans made or insured 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 subsecs. (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.
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
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 market for similar loans, as determined by the Secretary, and inserted provisos relating to security, disasters occurring after
1973—Pub. L. 93–24 substituted “5” for “3” per centum.
Effective Date Of Amendment
Amendment by section 624 of Pub. L. 104–127 effective
Amendment by Pub. L. 98–258 applicable to disasters occurring after
Section 162(b) of Pub. L. 97–35 provided that:
Amendment by section 3(b)(1) of Pub. L. 96–438 effective with respect to loans approved after
Amendment by Pub. L. 96–302 effective
Pub. L. 95–334, title I, § 119,
Miscellaneous
Loans by Small Business Administration in connection with any disaster occurring on or after