§ 1964. — Terms of loans.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 7USC1964]
TITLE 7--AGRICULTURE
CHAPTER 50--AGRICULTURAL CREDIT
SUBCHAPTER III--EMERGENCY LOANS
Sec. 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 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 the 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.
(Pub. L. 87-128, title III, Sec. 324, Aug. 8, 1961, 75 Stat. 311; Pub.
L. 93-24, Sec. 4, Apr. 20, 1973, 87 Stat. 25; Pub. L. 94-68, Sec. 5,
Aug. 5, 1975, 89 Stat. 381; Pub. L. 95-89, title IV, Sec. 406, Aug. 4,
1977, 91 Stat. 561; Pub. L. 95-334, title I, Sec. 119, Aug. 4, 1978, 92
Stat. 427; Pub. L. 96-302, title I, Sec. 120(b), July 2, 1980, 94 Stat.
841; Pub. L. 96-438, Sec. 3(a), (b)(1), Oct. 13, 1980, 94 Stat. 1872,
1873; Pub. L. 97-35, title I, Sec. 162(a), Aug. 13, 1981, 95 Stat. 378;
Pub. L. 98-258, title VI, Sec. 602(b), Apr. 10, 1984, 98 Stat. 138; Pub.
L. 99-198, title XIII, Sec. 1308(b)(3), (c), Dec. 23, 1985, 99 Stat.
1523; Pub. L. 100-707, title I, Sec. 109(c)(2), Nov. 23, 1988, 102 Stat.
4708; Pub. L. 104-127, title VI, Secs. 624, 625, Apr. 4, 1996, 110 Stat.
1091; Pub. L. 105-277, div. A, Sec. 101(a) [title VIII, Sec. 802], Oct.
21, 1998, 112 Stat. 2681, 2681-38.)
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, May 22, 1974, 88 Stat.
143, as amended, which is classified principally to chapter 68
(Sec. 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, Sec. 624, inserted section catchline.
Subsec. (a). Pub. L. 104-127, Sec. 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, Sec. 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, Sec. 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 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 applicant to exceed: $1,500,000 through end of
fiscal year 1980; $1,000,000 during fiscal year 1981; and $500,000
during 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 applicant'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 purposes and periods of
time.
Subsec. (b)(1). Pub. L. 99-198, Sec. 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, Sec. 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, Sec. 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, Sec. 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, Sec. 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 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
market for similar loans, as determined by the Secretary, and inserted
provisos relating to security, disasters occurring after Jan. 1, 1975,
and loans made by Small Business Administration.
1973--Pub. L. 93-24 substituted ``5'' for ``3'' per centum.
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 section 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 section] shall apply to loans made
with respect to disasters occurring after September 30, 1981''.
Effective Date of 1980 Amendments
Amendment by section 3(b)(1) of 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.
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
Section 119 of Pub. L. 95-334 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 connection 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 section 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.
Section Referred to in Other Sections
This section is referred to in sections 1961, 1963 of this title.
