175.35 - AGRICULTURAL LOAN ASSISTANCE PROGRAM.
175.35 AGRICULTURAL LOAN ASSISTANCE PROGRAM.
1. The authority shall establish and develop an agricultural loan
assistance program to facilitate the availability of affordable
operating capital to farmers by providing grants to lending
institutions as provided by this section.
2. The authority shall make available to farmers and lending
institutions eligibility application forms for the agricultural loan
assistance program. Applications to the authority for assistance
under this section shall be executed jointly by the lending
institution and the farmer upon approved forms.
3. The authority shall provide in the agricultural loan
assistance program that a grant will be provided in conjunction with
a farmer's operating loan only if the following criteria are
satisfied:
a. The farmer is a resident of the state.
b. The farmer is an individual, a partnership, or a family
farm corporation, as defined in section 9H.1, subsection 8.
c. The farming operation in which the farmer will use the
operating loan is located within the state.
d. The operating loan will be used by the farmer for
reasonable and necessary expenses and cash flow requirements of
farming as defined by rules of the authority.
e. The farmer has made full disclosure of the farmer's
finances to the lending institution and to the authority, to the
extent required by the authority.
f. Additional requirements as are prescribed by the authority
by rule, which may include but are not limited to:
(1) Participation in federal crop insurance programs, where
available.
(2) A consideration of the borrower's agreement to maintain farm
management techniques and standards established by the authority.
(3) Participation in federal farm programs, where applicable.
(4) The maximized use of available loan guarantees where
applicable.
(5) A consideration of factors demonstrating the farmer's need
for operating loan assistance and the probability of success with the
assistance in the farming operation in which the operating loan will
be used, including net worth, debt-to-asset ratio, debt service
coverage ratio, projected income, and projected cash flow.
g. The farmer has a net worth of not more than two hundred
thousand dollars.
h. The farmer develops a farm unit conservation plan, as
defined in section 161A.42, with the commissioners of the soil and
water conservation district where the land is located within one year
from the date of entering into the program, unless the authority
prescribes a shorter period by rule.
4. The authority may participate in and cooperate with programs
of an agency or instrumentality of the federal government in the
administration of the agricultural loan assistance program. The
authority may provide in the agricultural loan assistance program
that a grant may be provided in conjunction with a farmer's operating
loan only if the farmer and lending institution participate in one or
more operating loan assistance programs of an agency or
instrumentality of the federal government, which are determined to be
appropriate by the authority.
5. Upon approval of an eligibility application and a
determination by the authority that assistance pursuant to the
agricultural loan assistance program is needed to qualify a farmer
and lending institution for participation in an appropriate operating
loan assistance program of an agency or instrumentality of the
federal government, the authority may:
a. Enter into an agreement with the lending institution and
the farmer to supplement the assistance to be received pursuant to
the federal program in which agreement the lending institution shall
agree to reduce for up to three years the interest rate on the
farmer's operating loan to the rate determined by the authority to be
necessary to qualify the farmer and lending institution for
participation in the federal program and the farmer shall agree to
comply with the rules and requirements established by the authority.
b. Agree to give the lending institution, for the benefit of
the farmer, a grant in an amount to be determined by the authority to
partially reimburse the lending institution for the reduction of the
interest rate on the farmer's operating loan.
6. In determining the rate reduction to be required under
subsection 5, paragraph "a", and the amount of the grant to be
given under subsection 5, paragraph "b", the authority shall:
a. Consider the amount of any interest reimbursement to be
received by the farmer or lending institution pursuant to the federal
operating loan assistance program.
b. Not require a rate reduction pursuant to subsection 5,
paragraph "a", which is in excess of three percentage points in
addition to the interest rate reduction required pursuant to the
federal program.
c. Not give a grant pursuant to subsection 5, paragraph
"b", in an amount greater than three percent per annum of up to
one hundred thousand dollars of the principal balance of the farmer's
operating loan outstanding from time to time, for the term of the
loan or for three years, whichever is less.
7. Notwithstanding the provisions of subsections 4, 5, and 6,
upon approval of an eligibility application and a determination by
the authority that operating loan assistance will not be available to
an individual farmer and lending institution on a timely basis
pursuant to an appropriate program of the federal government, the
authority may:
a. Enter into an agreement with the lending institution and
the farmer in which the lending institution shall agree to reduce for
up to three years the interest rate on the farmer's operating loan to
a rate determined by the authority below the lending institution's
farm operating loan rate as certified to the authority and the farmer
shall agree to comply with the rules and requirements established by
the authority.
b. Agree to give to the lending institution, for the benefit
of the farmer, a grant in the amount, as determined by the authority,
up to three percent per annum of up to one hundred thousand dollars
of the principal balance of the farmer's operating loan outstanding
from time to time, for the term of the loan or for three years,
whichever is less, to partially reimburse the lending institution for
the reduction of the interest rate on the borrower's operating loan.
However, the grant shall not exceed fifty percent of the amount of
interest foregone by the lending institution pursuant to the rate
reduction under paragraph "a".
8. The authority may require a lending institution to submit
evidence satisfactory to the authority that the lending institution
has complied with the reduction in the interest rate as required by
an agreement pursuant to subsection 5 or 7. The authority may
inspect any books and records of a lending institution which are
pertinent to the administration of the agricultural loan assistance
program.
9. In order to assure compliance with this section and rules
adopted pursuant to this section, the authority may establish by rule
appropriate enforcement provisions, including but not limited to, the
payment of civil penalties by a lending institution or farmer. Section History: Recent Form
86 Acts, ch 1027, § 4; 87 Acts, ch 127, § 1--3; 87 Acts, ch 169,
§ 3