093_HB2420
LRB093 09685 BDD 09924 b
1 AN ACT concerning farm development.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 5. The Illinois Farm Development Act is amended
5 by changing Sections 12.1, 12.2, 12.4, and 12.5 as follows:
6 (20 ILCS 3605/12.1) (from Ch. 5, par. 1212.1)
7 Sec. 12.1. State Guarantees for existing debt.
8 (a) The Authority is authorized to issue State
9 Guarantees for farmers' existing debts held by a lender. For
10 the purposes of this Section, a farmer shall be a resident of
11 Illinois, who is a principal operator of a farm or land, at
12 least 50% of whose annual gross income is derived from
13 farming and whose debt to asset ratio shall not be less than
14 40%, except in those cases where the applicant has previously
15 used the guarantee program there shall be no debt to asset
16 ratio or income restriction. For the purposes of this
17 Section, debt to asset ratio shall mean the current
18 outstanding liabilities of the farmer divided by the current
19 outstanding assets of the farmer. The Authority shall
20 establish the maximum permissible debt to asset ratio based
21 on criteria established by the Authority.
22 Lenders shall apply for the State Guarantees on forms
23 provided by the Authority and certify that the application
24 and any other documents submitted are true and correct. The
25 lender or borrower, or both in combination, shall pay an
26 administrative fee as determined by the Authority. The
27 applicant shall be responsible for paying any fees or charges
28 involved in recording mortgages, releases, financing
29 statements, insurance for secondary market issues and any
30 other similar fees or charges as the Authority may require.
31 The application shall at a minimum contain the farmer's name,
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1 address, present credit and financial information, including
2 cash flow statements, financial statements, balance sheets,
3 and any other information pertinent to the application, and
4 the collateral to be used to secure the State Guarantee. In
5 addition, the lender must agree to bring the farmer's debt to
6 a current status at the time the State Guarantee is provided
7 and must also agree to charge a fixed or adjustable interest
8 rate which the Authority determines to be below the market
9 rate of interest generally available to the borrower. If
10 both the lender and applicant agree, the interest rate on the
11 State Guarantee Loan can be converted to a fixed interest
12 rate at any time during the term of the loan.
13 Any State Guarantees provided under this Section (i)
14 shall not exceed $500,000 per farmer, (ii) shall be set up on
15 a payment schedule not to exceed 30 years, and shall be no
16 longer than 30 years in duration, and (iii) shall be subject
17 to an annual review and renewal by the lender and the
18 Authority; provided that only one such State Guarantee shall
19 be outstanding per farmer at any one time. No State
20 Guarantee shall be revoked by the Authority without a 90 day
21 notice, in writing, to all parties. In those cases were the
22 borrower has not previously used the guarantee program, the
23 lender shall not call due any loan during the first 3 years
24 for any reason except for lack of performance or insufficient
25 collateral. The lender can review and withdraw or continue
26 with the State Guarantee on an annual basis after the first 3
27 years of the loan, provided a 90 day notice, in writing, to
28 all parties has been given.
29 (b) The Authority shall provide or renew a State
30 Guarantee to a lender if:
31 (i) A fee equal to 25 basis points on the loan is
32 paid to the Authority on an annual basis by the lender.
33 (ii) The application provides collateral acceptable
34 to the Authority that is at least equal to the State's
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1 portion of the Guarantee to be provided.
2 (iii) The lender assumes all responsibility and
3 costs for pursuing legal action on collecting any loan
4 that is delinquent or in default.
5 (iv) The lender is responsible for the first 15% of
6 the outstanding principal of the note for which the State
7 Guarantee has been applied.
8 (c) There is hereby created outside of the State
9 Treasury a special fund to be known as the Illinois
10 Agricultural Loan Guarantee Fund. The State Treasurer shall
11 be custodian of this Fund. Any amounts in the Illinois
12 Agricultural Loan Guarantee Fund not currently needed to meet
13 the obligations of the Fund shall be invested as provided by
14 law, and all interest earned from these investments shall be
15 deposited into the Fund until the Fund reaches the maximum
16 amount authorized in this Act; thereafter, interest earned
17 shall be deposited into the General Revenue Fund. After
18 September 1, 1989, annual investment earnings equal to 1.5%
19 of the Fund shall remain in the Fund to be used for the
20 purposes established in Section 12.3 of this Act.
21 The Authority is authorized to transfer to the Fund such
22 amounts as are necessary to satisfy claims during the
23 duration of the State Guarantee program to secure State
24 Guarantees issued under this Section. If for any reason the
25 General Assembly fails to make an appropriation sufficient to
26 meet these obligations, this Act shall constitute an
27 irrevocable and continuing appropriation of an amount
28 necessary to secure guarantees as defaults occur and the
29 irrevocable and continuing authority for, and direction to,
30 the State Treasurer and the Comptroller to make the necessary
31 transfers to the Illinois Agricultural Loan Guarantee Fund,
32 as directed by the Governor, out of the General Revenue Fund.
33 Within 30 days after November 15, 1985, the Authority may
34 transfer up to $7,000,000 from available appropriations into
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1 the Illinois Agricultural Loan Guarantee Fund for the
2 purposes of this Act. Thereafter, the Authority may transfer
3 additional amounts into the Illinois Agricultural Loan
4 Guarantee Fund to secure guarantees for defaults as defaults
5 occur.
6 In the event of default by the farmer, the lender shall
7 be entitled to, and the Authority shall direct payment on,
8 the State Guarantee after 90 days of delinquency. All
9 payments by the Authority shall be made from the Illinois
10 Agricultural Loan Guarantee Fund to satisfy claims against
11 the State Guarantee. The Illinois Agricultural Loan
12 Guarantee Fund shall guarantee receipt of payment of the 85%
13 of the principal and interest owed on the State Guarantee
14 Loan by the farmer to the guarantee holder.
15 It shall be the responsibility of the lender to proceed
16 with the collecting and disposing of collateral on the State
17 Guarantee within 14 months of the time the State Guarantee is
18 declared delinquent; provided, however, that the lender shall
19 not collect or dispose of collateral on the State Guarantee
20 without the express written prior approval of the Authority.
21 If the lender does not dispose of the collateral within 14
22 months, the lender shall be liable to repay to the State
23 interest on the State Guarantee equal to the same rate which
24 the lender charges on the State Guarantee; provided, however,
25 that the Authority may extend the 14 month period for a
26 lender in the case of bankruptcy or extenuating
27 circumstances. The Fund shall be reimbursed for any amounts
28 paid under this Section upon liquidation of the collateral.
29 The Authority, by resolution of the Board, may borrow sums
30 from the Fund and provide for repayment as soon as may be
31 practical upon receipt of payments of principal and interest
32 by a farmer. Money may be borrowed from the Fund by the
33 Authority for the sole purpose of paying certain interest
34 costs for farmers associated with selling a loan subject to a
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1 State Guarantee in a secondary market as may be deemed
2 reasonable and necessary by the Authority.
3 (d) Notwithstanding the provisions of this Section 12.1
4 with respect to the farmers and lenders who may obtain State
5 Guarantees, the Authority may promulgate rules establishing
6 the eligibility of farmers and lenders to participate in the
7 State guarantee program and the terms, standards, and
8 procedures that will apply, when the Authority finds that
9 emergency conditions in Illinois agriculture have created the
10 need for State Guarantees pursuant to terms, standards, and
11 procedures other than those specified in this Section.
12 (Source: P.A. 90-325, eff. 8-8-97; 91-386, eff. 1-1-00.)
13 (20 ILCS 3605/12.2) (from Ch. 5, par. 1212.2)
14 Sec. 12.2. State Guarantees for loans to farmers and
15 agribusiness; eligibility.
16 (a) The Authority is authorized to issue State
17 Guarantees to lenders for loans to eligible farmers and
18 agribusinesses for purposes set forth in this Section. For
19 purposes of this Section, an eligible farmer shall be a
20 resident of Illinois (i) who is principal operator of a farm
21 or land, at least 50% of whose annual gross income is derived
22 from farming, (ii) whose annual total sales of agricultural
23 products, commodities, or livestock exceeds $20,000, and
24 (iii) whose net worth does not exceed $500,000. An eligible
25 agribusiness shall be that as defined in Section 2 of this
26 Act.
27 The Authority may approve applications by farmers and
28 agribusinesses that promote diversification of the farm
29 economy of this State through the growth and development of
30 new crops or livestock not customarily grown or produced in
31 this State or that emphasize a vertical integration of grain
32 or livestock produced or raised in this State into a finished
33 agricultural product for consumption or use. "New crops or
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1 livestock not customarily grown or produced in this State"
2 shall not include corn, soybeans, wheat, swine, or beef or
3 dairy cattle. "Vertical integration of grain or livestock
4 produced or raised in this State" shall include any new or
5 existing grain or livestock grown or produced in this State.
6 Lenders shall apply for the State Guarantees on forms
7 provided by the Authority, certify that the application and
8 any other documents submitted are true and correct, and pay
9 an administrative fee as determined by the Authority. The
10 applicant shall be responsible for paying any fees or charges
11 involved in recording mortgages, releases, financing
12 statements, insurance for secondary market issues and any
13 other similar fees or charges as the Authority may require.
14 The application shall at a minimum contain the farmer's or
15 agribusiness' name, address, present credit and financial
16 information, including cash flow statements, financial
17 statements, balance sheets, and any other information
18 pertinent to the application, and the collateral to be used
19 to secure the State Guarantee. In addition, the lender must
20 agree to charge an interest rate, which may vary, on the loan
21 that the Authority determines to be below the market rate of
22 interest generally available to the borrower. If both the
23 lender and applicant agree, the interest rate on the State
24 Guarantee Loan can be converted to a fixed interest rate at
25 any time during the term of the loan.
26 Any State Guarantees provided under this Section (i)
27 shall not exceed $500,000 per farmer or an amount as
28 determined by the Authority on a case-by-case basis for an
29 agribusiness, (ii) shall not exceed a term of 15 years, and
30 (iii) shall be subject to an annual review and renewal by the
31 lender and the Authority; provided that only one such State
32 Guarantee shall be made per farmer or agribusiness, except
33 that additional State Guarantees may be made for purposes of
34 expansion of projects financed in part by a previously issued
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1 State Guarantee. No State Guarantee shall be revoked by the
2 Authority without a 90 day notice, in writing, to all
3 parties. The lender shall not call due any loan for any
4 reason except for lack of performance, insufficient
5 collateral, or maturity. A lender may review and withdraw or
6 continue with a State Guarantee on an annual basis after the
7 first 5 years following closing of the loan application if
8 the loan contract provides for an interest rate that shall
9 not vary. A lender shall not withdraw a State Guarantee if
10 the loan contract provides for an interest rate that may
11 vary, except for reasons set forth herein.
12 (b) The Authority shall provide or renew a State
13 Guarantee to a lender if:
14 i. A fee equal to 25 basis points on the loan is
15 paid to the Authority on an annual basis by the lender.
16 ii. The application provides collateral acceptable
17 to the Authority that is at least equal to the State's
18 portion of the Guarantee to be provided.
19 iii. The lender assumes all responsibility and
20 costs for pursuing legal action on collecting any loan
21 that is delinquent or in default.
22 iv. The lender is responsible for the first 15% of
23 the outstanding principal of the note for which the State
24 Guarantee has been applied.
25 (c) There is hereby created outside of the State
26 Treasury a special fund to be known as the Illinois Farmer
27 and Agribusiness Loan Guarantee Fund. The State Treasurer
28 shall be custodian of this Fund. Any amounts in the Fund not
29 currently needed to meet the obligations of the Fund shall be
30 invested as provided by law, and all interest earned from
31 these investments shall be deposited into the Fund until the
32 Fund reaches the maximum amounts authorized in this Act;
33 thereafter, interest earned shall be deposited into the
34 General Revenue Fund. After September 1, 1989, annual
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1 investment earnings equal to 1.5% of the Fund shall remain in
2 the Fund to be used for the purposes established in Section
3 12.3 of this Act.
4 The Authority is authorized to transfer such amounts as
5 are necessary to satisfy claims from available appropriations
6 and from fund balances of the Farm Emergency Assistance Fund
7 as of June 30 of each year to the Illinois Farmer and
8 Agribusiness Loan Guarantee Fund to secure State Guarantees
9 issued under this Section and Sections 12.4 and 12.5. If for
10 any reason the General Assembly fails to make an
11 appropriation sufficient to meet these obligations, this Act
12 shall constitute an irrevocable and continuing appropriation
13 of an amount necessary to secure guarantees as defaults occur
14 and the irrevocable and continuing authority for, and
15 direction to, the State Treasurer and the Comptroller to make
16 the necessary transfers to the Illinois Farmer and
17 Agribusiness Loan Guarantee Fund, as directed by the
18 Governor, out of the General Revenue Fund.
19 In the event of default by the borrower on State
20 Guarantee Loans under this Section, Section 12.4, or Section
21 12.5, the lender shall be entitled to, and the Authority
22 shall direct payment on, the State Guarantee after 90 days of
23 delinquency. All payments by the Authority shall be made
24 from the Illinois Farmer and Agribusiness Loan Guarantee Fund
25 to satisfy claims against the State Guarantee.
26 It shall be the responsibility of the lender to proceed
27 with the collecting and disposing of collateral on the State
28 Guarantee under this Section, Section 12.4, or Section 12.5
29 within 14 months of the time the State Guarantee is declared
30 delinquent. If the lender does not dispose of the collateral
31 within 14 months, the lender shall be liable to repay to the
32 State interest on the State Guarantee equal to the same rate
33 that the lender charges on the State Guarantee, provided that
34 the Authority shall have the authority to extend the 14 month
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1 period for a lender in the case of bankruptcy or extenuating
2 circumstances. The Fund shall be reimbursed for any amounts
3 paid under this Section, Section 12.4, or Section 12.5 upon
4 liquidation of the collateral.
5 The Authority, by resolution of the Board, may borrow
6 sums from the Fund and provide for repayment as soon as may
7 be practical upon receipt of payments of principal and
8 interest by a borrower on State Guarantee Loans under this
9 Section, Section 12.4, or Section 12.5. Money may be borrowed
10 from the Fund by the Authority for the sole purpose of paying
11 certain interest costs for borrowers associated with selling
12 a loan subject to a State Guarantee under this Section,
13 Section 12.4, or Section 12.5 in a secondary market as may be
14 deemed reasonable and necessary by the Authority.
15 (d) Notwithstanding the provisions of this Section 12.2
16 with respect to the farmers, agribusinesses, and lenders who
17 may obtain State Guarantees, the Authority may promulgate
18 rules establishing the eligibility of farmers,
19 agribusinesses, and lenders to participate in the State
20 Guarantee program and the terms, standards, and procedures
21 that will apply, when the Authority finds that emergency
22 conditions in Illinois agriculture have created the need for
23 State Guarantees pursuant to terms, standards, and procedures
24 other than those specified in this Section.
25 (Source: P.A. 90-325, eff. 8-8-97; 91-386, eff. 1-1-00.)
26 (20 ILCS 3605/12.4) (from Ch. 5, par. 1212.4)
27 Sec. 12.4. Young Farmer Loan Guarantee Program.
28 (a) The Authority is authorized to issue State
29 Guarantees to lenders for loans to finance or refinance debts
30 of young farmers. For the purposes of this Section, a young
31 farmer is a resident of Illinois who is at least 18 years of
32 age and who is a principal operator of a farm or land, who
33 derives at least 50% of annual gross income from farming,
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1 whose net worth is not less than $10,000 and whose debt to
2 asset ratio is not less than 40%. For the purposes of this
3 Section, debt to asset ratio means current outstanding
4 liabilities, including any debt to be financed or refinanced
5 under this Section, divided by current outstanding assets.
6 The Authority shall establish the maximum permissible debt to
7 asset ratio based on criteria established by the Authority.
8 Lenders shall apply for the State Guarantees on forms
9 provided by the Authority and certify that the application
10 and any other documents submitted are true and correct. The
11 lender or borrower, or both in combination, shall pay an
12 administrative fee as determined by the Authority. The
13 applicant shall be responsible for paying any fee or charge
14 involved in recording mortgages, releases, financing
15 statements, insurance for secondary market issues, and any
16 other similar fee or charge that the Authority may require.
17 The application shall at a minimum contain the young farmer's
18 name, address, present credit and financial information,
19 including cash flow statements, financial statements, balance
20 sheets, and any other information pertinent to the
21 application, and the collateral to be used to secure the
22 State Guarantee. In addition, the borrower must certify to
23 the Authority that, at the time the State Guarantee is
24 provided, the borrower will not be delinquent in the
25 repayment of any debt. The lender must agree to charge a
26 fixed or adjustable interest rate that the Authority
27 determines to be below the market rate of interest generally
28 available to the borrower. If both the lender and applicant
29 agree, the interest rate on the State guaranteed loan can be
30 converted to a fixed interest rate at any time during the
31 term of the loan.
32 State Guarantees provided under this Section (i) shall
33 not exceed $500,000 per young farmer, (ii) shall be set up on
34 a payment schedule not to exceed 30 years, but shall be no
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1 longer than 15 years in duration, and (iii) shall be subject
2 to an annual review and renewal by the lender and the
3 Authority. A young farmer may use this program more than once
4 provided the aggregate principal amount of State Guarantees
5 under this Section to that young farmer does not exceed
6 $500,000. No State Guarantee shall be revoked by the
7 Authority without a 90 day notice, in writing, to all
8 parties.
9 (b) The Authority shall provide or renew a State
10 Guarantee to a lender if:
11 (i) The lender pays a fee equal to 25 basis points
12 on the loan to the Authority on an annual basis.
13 (ii) The application provides collateral acceptable
14 to the Authority that is at least equal to the State
15 Guarantee.
16 (iii) The lender assumes all responsibility and
17 costs for pursuing legal action on collecting any loan
18 that is delinquent or in default.
19 (iv) The lender is at risk for the first 15% of the
20 outstanding principal of the note for which the State
21 Guarantee is provided.
22 (c) The Illinois Farmer and Agribusiness Loan Guarantee
23 Fund may be used to secure State Guarantees issued under this
24 Section as provided in Section 12.2.
25 (d) Notwithstanding the provisions of this Section 12.4
26 with respect to the young farmers and lenders who may obtain
27 State Guarantees, the Authority may promulgate rules
28 establishing the eligibility of young farmers and lenders to
29 participate in the State Guarantee program and the terms,
30 standards, and procedures that will apply, when the Authority
31 finds that emergency conditions in Illinois agriculture have
32 created the need for State Guarantees pursuant to terms,
33 standards, and procedures other than those specified in this
34 Section.
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1 (Source: P.A. 90-325, eff. 8-8-97; 91-386, eff. 1-1-00.)
2 (20 ILCS 3605/12.5)
3 Sec. 12.5. Specialized Livestock Guarantee Program.
4 (a) The Authority is authorized to issue State
5 Guarantees to lenders for loans to finance or refinance debts
6 for specialized livestock operations that are or will be
7 located in Illinois. For purposes of this Section, a
8 "specialized livestock operation" includes, but is not
9 limited to, dairy, beef, and swine enterprises.
10 (b) Lenders shall apply for the State Guarantees on
11 forms provided by the Authority and certify that the
12 application and any other documents submitted are true and
13 correct. The lender or borrower, or both in combination,
14 shall pay an administrative fee as determined by the
15 Authority. The applicant shall be responsible for paying any
16 fee or charge involved in recording mortgages, releases,
17 financing statements, insurance for secondary market issues,
18 and any other similar fee or charge that the Authority may
19 require. The application shall, at a minimum, contain the
20 farmer's name, address, present credit and financial
21 information, including cash flow statements, financial
22 statements, balance sheets, and any other information
23 pertinent to the application, and the collateral to be used
24 to secure the State Guarantee. In addition, the borrower
25 must certify to the Authority that, at the time the State
26 Guarantee is provided, the borrower will not be delinquent in
27 the repayment of any debt. The lender must agree to charge a
28 fixed or adjustable interest rate that the Authority
29 determines to be below the market rate of interest generally
30 available to the borrower. If both the lender and applicant
31 agree, the interest rate on the State guaranteed loan can be
32 converted to a fixed interest rate at any time during the
33 term of the loan.
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1 (c) State Guarantees provided under this Section (i)
2 shall not exceed $1,000,000 per applicant, (ii) shall be no
3 longer than 15 years in duration, and (iii) shall be subject
4 to an annual review and renewal by the lender and the
5 Authority. An applicant may use this program more than once,
6 provided that the aggregate principal amount of State
7 Guarantees under this Section to that applicant does not
8 exceed $1,000,000. A State Guarantee shall not be revoked by
9 the Authority without a 90-day notice, in writing, to all
10 parties.
11 (d) The Authority shall provide or renew a State
12 Guarantee to a lender if:
13 (i) The lender pays a fee equal to 25 basis points
14 on the loan to the Authority on an annual basis.
15 (ii) The application provides collateral acceptable
16 to the Authority that is at least equal to the State
17 Guarantee.
18 (iii) The lender assumes all responsibility and
19 costs for pursuing legal action on collecting any loan
20 that is delinquent or in default.
21 (iv) The lender is at risk for the first 15% of the
22 outstanding principal of the note for which the State
23 Guarantee is provided.
24 (e) The Illinois Farmer and Agribusiness Loan Guarantee
25 Fund may be used to secure State Guarantees issued under this
26 Section as provided in Section 12.2.
27 (f) Notwithstanding the provisions of this Section 12.5
28 with respect to the specialized livestock operations and
29 lenders who may obtain State Guarantees, the Authority may
30 promulgate rules establishing the eligibility of specialized
31 livestock operations and lenders to participate in the State
32 Guarantee program and the terms, standards, and procedures
33 that will apply, when the Authority finds that emergency
34 conditions in Illinois agriculture have created the need for
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1 State Guarantees pursuant to terms, standards, and procedures
2 other than those specified in this Section.
3 (Source: P.A. 91-386, eff. 1-1-00.)