§ 1983a. — Prompt approval of loans and loan guarantees.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 7USC1983a]
TITLE 7--AGRICULTURE
CHAPTER 50--AGRICULTURAL CREDIT
SUBCHAPTER IV--ADMINISTRATIVE PROVISIONS
Sec. 1983a. Prompt approval of loans and loan guarantees
(a) Applications; time for action by Secretary; notice; statement of
reasons
(1) The Secretary shall approve or disapprove an application for a
loan or loan guarantee made under this chapter, and notify the applicant
of such action, not later than 60 days after the Secretary has received
a complete application for such loan or loan guarantee.
(2)(A) If an application for a loan or loan guarantee under this
chapter (other than under subchapter II of this chapter) is incomplete,
the Secretary shall inform the applicant of the reasons such application
is incomplete not later than 20 days after the Secretary has received
such application.
(B)(i) Not later than 10 calendar days after the Secretary receives
an application for an operating loan or loan guarantee under subchapter
II of this chapter, the Secretary shall notify the applicant of any
information required before a decision may be made on the application.
On receipt of an application, the Secretary shall request from other
parties such information as may be needed in connection with the
application.
(ii) Not later than 15 calendar days after the date an agency of the
Department of Agriculture receives a request for information made
pursuant to clause (i), the agency shall provide the Secretary with the
requested information.
(iii) If, not later than 20 calendar days after the date a request
is made pursuant to clause (i) with respect to an application, the
Secretary has not received the information requested, the Secretary
shall notify the applicant and the district office of the Farmers Home
Administration, in writing, of the outstanding information.
(iv) A county office shall notify the district office of the Farmers
Home Administration of each application for an operating loan or loan
guarantee under subchapter II of this chapter that is pending more than
45 days after receipt, and the reasons the application is pending.
(v) A district office that receives a notice provided under clause
(iv) with respect to an application shall immediately take steps to
ensure that final action is taken on the application not later than 15
days after the date of the receipt of the notice.
(vi) The district office shall report to the State office of the
Farmers Home Administration on each application for an operating loan or
loan guarantee under subchapter II of this chapter that is pending more
than 45 days after receipt by the county committee, and the reasons the
application is pending.
(vii) Each month, the Secretary shall notify the Committee on
Agriculture of the House of Representatives and the Committee on
Agriculture, Nutrition, and Forestry of the Senate, on a State-by-State
basis, as to each application for an operating loan or loan guarantee
under subchapter II of this chapter on which final action had not been
taken within 60 calendar days after receipt by the Secretary, and the
reasons final action had not been taken.
(3) If an application for a loan or loan guarantee under this
chapter is disapproved by the Secretary, the Secretary shall state the
reasons for the disapproval in the notice required under paragraph (1).
(4)(A) Notwithstanding paragraph (1), each application for a loan or
loan guarantee under section 1932(a) of this title, or for a loan under
section 1926(a) of this title, that is to be disapproved by the
Secretary solely because the Secretary lacks the necessary amount of
funds to make the loan or guarantee shall not be disapproved but shall
be placed in pending status.
(B) The Secretary shall retain the pending application and
reconsider the application beginning on the date that sufficient funds
become available.
(C) Not later than 60 days after funds become available regarding
each pending application, the Secretary shall notify the applicant of
the approval or disapproval of funding for the application.
(b) Loan proceeds; time for receipt
(1) Except as provided in paragraph (2), if an application for an
insured loan under this chapter is approved by the Secretary, the
Secretary shall provide the loan proceeds to the applicant not later
than 15 days (or such longer period as the applicant may approve) after
the application for the loan is approved by the Secretary.
(2) If the Secretary is unable to provide the loan proceeds to the
applicant within such 15-day period because sufficient funds are not
available to the Secretary for such purpose, the Secretary shall provide
the loan proceeds to the applicant as soon as practicable (but in no
event later than 15 days unless the applicant agrees to a longer period)
after sufficient funds for such purpose become available to the
Secretary.
(c) Reconsideration of applications; time for action by Secretary
If an application for a loan or loan guarantee under this chapter is
disapproved by the Secretary, but such action is subsequently reversed
or revised as the result of an appeal within the Department of
Agriculture or to the courts of the United States and the application is
returned to the Secretary for further consideration, the Secretary shall
act on the application and provide the applicant with notice of the
action within 15 days after return of the application to the Secretary.
(d) Approved lender designation applications; time for decision by
Secretary
In carrying out the approved lender program established by exhibit A
to subpart B of part 1980 of title 7, Code of Federal Regulations, the
Secretary shall ensure that each request of a lending institution for
designation as an approved lender under such program is reviewed, and a
decision made on the application, not later than 15 days after the
Secretary has received a complete application for such designation.
(e) Processing loan applications; personnel and other resources made
available; use of authorities of law
(1) As soon as practicable after December 23, 1985, the Secretary
shall take such steps as are necessary to make personnel, including the
payment of overtime for such personnel, and other resources of the
Department of Agriculture available to the Farmers Home Administration
as are sufficient to enable the Farmers Home Administration to
expeditiously process loan applications that are submitted by farmers
and ranchers.
(2) In carrying out paragraph (1), the Secretary may use any
authority of law provided to the Secretary, including--
(A) the Agricultural Credit Insurance Fund established under
section 1929 of this title; and
(B) the employment procedures used in connection with the
emergency loan program established under subchapter III of this
chapter.
(f) Graduation of seasoned direct loan borrowers to loan guarantee
program
(1) As used in this subsection:
(A) The term ``approved lender'' means a lender approved prior
to October 28, 1992, by the Secretary under the approved lender
program established by exhibit A to subpart B of part 1980 of title
7, Code of Federal Regulations (as in effect on January 1, 1991), or
a lender certified under section 1989 \1\ of this title.
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\1\ See References in Text note below.
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(B) The term ``seasoned direct loan borrower'' means a borrower
receiving a direct loan under this chapter who has been classified
as ``commercial'' or ``standard'' under subpart W of part 2006 of
the Instruction Manual (as in effect on January 1, 1991).
(2) The Secretary, or a contracting third party, shall annually
review under section 2006b of this title the loans of each seasoned loan
borrower. If, based on the review, it is determined that a borrower
would be able to obtain a loan, guaranteed by the Secretary, from a
commercial or cooperative lender at reasonable rates and terms for loans
for similar purposes and periods of time, the Secretary shall assist the
borrower in applying for the commercial or cooperative loan.
(3) In accordance with section 2006d of this title, the Secretary
shall prepare a prospectus on each seasoned direct loan borrower
determined eligible to obtain a guaranteed loan. The prospectus shall
contain a description of the amounts of loan guarantee and interest
assistance that the Secretary will provide to the seasoned direct loan
borrower to enable the seasoned direct loan borrower to carry out a
financially viable farming plan if a guaranteed loan is made.
(4) Verification.--
(A) In general.--The Secretary shall provide a prospectus of a
seasoned direct loan borrower to each approved lender whose lending
area includes the location of the seasoned direct loan borrower.
(B) Notification.--The Secretary shall notify each borrower of a
loan that a prospectus has been provided to a lender under
subparagraph (A).
(C) Credit extended.--If the Secretary receives an offer from an
approved lender to extend credit to the seasoned direct loan
borrower under terms and conditions contained in the prospectus, the
seasoned direct loan borrower shall not be eligible for an insured
loan from the Secretary under subchapter I or II of this chapter,
except as otherwise provided in this subsection.
(5) If the Secretary is unable to provide loan guarantees and, if
necessary, interest assistance to the seasoned direct loan borrower
under this subsection in amounts sufficient to enable the seasoned
direct loan borrower to borrow from commercial sources the amount
required to carry out a financially viable farming plan, or if the
Secretary does not receive an offer from an approved lender to extend
credit to a seasoned direct loan borrower under the terms and conditions
contained in the prospectus, the Secretary shall make an insured loan to
the seasoned direct loan borrower under subchapter I or II of this
chapter, whichever is applicable.
(6) To the extent necessary for the borrower to obtain a loan,
guaranteed by the Secretary, from a commercial or cooperative lender,
the Secretary shall provide interest rate reductions as provided for
under section 1999 of this title.
(g) Simplified application forms for loan guarantees
(1) In general
The Secretary shall provide to lenders a short, simplified
application form for guarantees under this chapter of--
(A) farmer program loans the principal amount of which is
$125,000 or less; and
(B) business and industry guaranteed loans under section
1932(a)(1) of this title the principal amount of which is--
(i) in the case of a loan guarantee made during fiscal
year 2002 or 2003, $400,000 or less; and
(ii) in the case of a loan guarantee made during any
subsequent fiscal year--
(I) $400,000 or less; or
(II) if the Secretary determines that there is not a
significant increased risk of a default on the loan,
$600,000 or less.
(2) Water and waste disposal grants and loans
The Secretary shall develop an application process that
accelerates, to the maximum extent practicable, the processing of
applications for water and waste disposal grants or direct or
guaranteed loans under paragraph (1) or (2) of section 1926(a) of
this title the grant award amount or principal loan amount,
respectively, of which is $300,000 or less.
(3) Administration
In developing an application under this subsection, the
Secretary shall--
(A) consult with commercial and cooperative lenders; and
(B) ensure that--
(i) the form can be completed manually or
electronically, at the option of the lender;
(ii) the form minimizes the documentation required to
accompany the form;
(iii) the cost of completing and processing the form is
minimal; and
(iv) the form can be completed and processed in an
expeditious manner.
(Pub. L. 87-128, title III, Sec. 333A, as added Pub. L. 99-198, title
XIII, Sec. 1312(a), Dec. 23, 1985, 99 Stat. 1524; amended Pub. L. 101-
624, title XVIII, Sec. 1811, title XXIII, Sec. 2388(f), Nov. 28, 1990,
104 Stat. 3821, 4053; Pub. L. 102-554, Secs. 13-15, Oct. 28, 1992, 106
Stat. 4152, 4153; Pub. L. 104-127, title VI, Sec. 637, Apr. 4, 1996, 110
Stat. 1093; Pub. L. 107-171, title V, Sec. 5307, title VI, Sec. 6019,
May 13, 2002, 116 Stat. 345, 362.)
References in Text
For definition of ``this chapter'', referred to in subsecs. (a),
(b)(1), (c), (f)(1)(B), and (g)(1), see note set out under section 1921
of this title.
Section 1989 of this title, referred to in subsec. (f)(1)(A), was in
the original ``section 114'', and was translated as meaning section 339
of Pub. L. 87-128, which is classified to section 1989 of this title, to
reflect the probable intent of Congress, because Pub. L. 87-128 does not
contain a section 114 and section 1989 provides for a lender
certification program.
Amendments
2002--Subsec. (g). Pub. L. 107-171, Sec. 6019, added subsec. (g) and
struck out former subsec. (g) which read as follows:
``(1) The Secretary shall provide to lenders a short, simplified
application form for guarantees under this chapter of loans the
principal amount of which is $125,000 or less.
``(2) In developing the application, the Secretary shall--
``(A) consult with commercial and cooperative lenders; and
``(B) ensure that--
``(i) the form can be completed manually or electronically,
at the option of the lender;
``(ii) the form minimizes the documentation required to
accompany the form;
``(iii) the cost of completing and processing the form is
minimal; and
``(iv) the form can be completed and processed in an
expeditious manner.''
Subsec. (g)(1). Pub. L. 107-171, Sec. 5307, substituted ``$125,000''
for ``$50,000''.
1996--Subsec. (f)(4). Pub. L. 104-127, Sec. 637(1), inserted
heading.
Subsec. (f)(4)(A). Pub. L. 104-127, Sec. 637(1), designated first
sentence of par. (4) as subpar. (A), inserted heading, and directed the
substitution of ``The Secretary shall provide a prospectus of a
seasoned'' for ``With'' and all that follows through ``seasoned'', which
was executed by making the substitution for all that follows through
``seasoned'' the first place appearing resulting in making the
substitution for ``With the approval of the borrower, the Secretary
shall provide the prospectus of the seasoned'', to reflect the probable
intent of Congress.
Subsec. (f)(4)(B), (C). Pub. L. 104-127, Sec. 637(2), added subpar.
(B), designated second sentence of par. (4) as subpar. (C), and inserted
heading.
1992--Subsec. (a)(2). Pub. L. 102-554, Sec. 13, designated existing
provisions as subpar. (A), inserted ``(other than under subchapter II of
this chapter)'' after ``under this chapter'', and added subpar. (B).
Subsec. (f). Pub. L. 102-554, Sec. 14, added subsec. (f).
Subsec. (g). Pub. L. 102-554, Sec. 15, added subsec. (g).
1990--Subsec. (a)(4). Pub. L. 101-624, Sec. 1811, added par. (4).
Subsec. (c). Pub. L. 101-624, Sec. 2388(f), substituted ``If'' for
``In''.
Effective Date
Section 1312(b) of Pub. L. 99-198 provided that: ``The amendment
made by subsection (a) [enacting this section] shall be effective with
respect to applications for loans or loan guarantees under the
Consolidated Farm and Rural Development Act (7 U.S.C. 1921 et seq.)
received by the Secretary of Agriculture after the date of enactment of
this Act [Dec. 23, 1985].''
