SB1776 104TH GENERAL ASSEMBLY

LRB104 11449 HLH 21537 b

104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB1776

Introduced 2/6/2025, by Sen. Michael W. Halpin - Doris Turner

SYNOPSIS AS INTRODUCED:

20 ILCS 3501/830-45
20 ILCS 3501/830-55

Amends the Illinois Finance Authority Act. In provisions concerning the Young Farmer Loan Guarantee Program, provides that State Guarantees under the program shall not exceed $1,000,000 (currently $500,000) per young farmer. Provides that the Illinois Finance Authority is authorized to issue State Guarantees to lenders for loans to finance or refinance tuition debt incurred by or on behalf of an eligible farmer for post-secondary education in an agriculture field. Provides that the Illinois Finance Authority may use moneys under the Working Capital Loan Guarantee Program to finance rental payments for land leased to the farmer. Provides that State Guarantees provided under the Working Capital Loan Guarantee Program may not exceed $500,000 per borrower. Effective immediately

A BILL FOR

AN ACT concerning finance.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Finance Authority Act is amended by changing Sections 830-45 and 830-55 as follows:

(20 ILCS 3501/830-45)

Sec. 830-45. Young Farmer Loan Guarantee Program.

(a) The Authority is authorized to issue State Guarantees to lenders for loans to finance or refinance debts of young farmers. For the purposes of this Section, a young farmer is a resident of Illinois who is at least 18 years of age and who is a principal operator of a farm or land, who derives at least 50% of annual gross income from farming, whose net worth is not less than $10,000 and whose debt to asset ratio is not less than 40%. For the purposes of this Section, debt to asset ratio means current outstanding liabilities, including any debt to be financed or refinanced under this Section 830-45, divided by current outstanding assets. The Authority shall establish the maximum permissible debt to asset ratio based on criteria established by the Authority. Lenders shall apply for the State Guarantees on forms provided by the Authority and certify that the application and any other documents submitted are true and correct. The lender or borrower, or both in combination, shall pay an administrative fee as determined by the Authority. The applicant shall be responsible for paying any fee or charge involved in recording mortgages, releases, financing statements, insurance for secondary market issues, and any other similar fee or charge that the Authority may require. The application shall at a minimum contain the young farmer's name, address, present credit and financial information, including cash flow statements, financial statements, balance sheets, and any other information pertinent to the application, and the collateral to be used to secure the State Guarantee. In addition, the borrower must certify to the Authority that, at the time the State Guarantee is provided, the borrower will not be delinquent in the repayment of any debt. The lender must agree to charge a fixed or adjustable interest rate that the Authority determines to be below the market rate of interest generally available to the borrower. If both the lender and applicant agree, the interest rate on the State guaranteed loan can be converted to a fixed interest rate at any time during the term of the loan. State Guarantees provided under this Section (i) shall not exceed $1,000,000 $500,000 per young farmer, (ii) shall be set up on a payment schedule not to exceed 30 years, but shall be no longer than 15 years in duration, and (iii) shall be subject to an annual review and renewal by the lender and the Authority. A young farmer may use this program more than once provided the aggregate principal amount of State Guarantees under this Section to that young farmer does not exceed $1,000,000 $500,000. No State Guarantee shall be revoked by the Authority without a 90-day notice, in writing, to all parties.

(b) The Authority shall provide or renew a State Guarantee to a lender if:

(i) The lender pays a fee equal to 25 basis points on the loan to the Authority on an annual basis.

(ii) The application provides collateral acceptable to the Authority that is at least equal to the State Guarantee.

(iii) The lender assumes all responsibility and costs for pursuing legal action on collecting any loan that is delinquent or in default.

(iv) The lender is at risk for the first 15% of the outstanding principal of the note for which the State Guarantee is provided.

(c) The Illinois Agricultural Loan Guarantee Fund, the Illinois Farmer and Agribusiness Loan Guarantee Fund, and the Industrial Project Insurance Fund may be used to secure State Guarantees issued under this Section as provided in Section 830-30, Section 830-35, and subsection (j) of Section 805-20, respectively. All payments by the Authority to satisfy claims against the State Guarantee shall be made, in whole or in part, from any of the following funds in such order and in such amounts as the Authority shall determine: (1) the Industrial Project Insurance Fund (if the Authority exercises its discretion under subsection (j) of Section 805-20); (2) the Illinois Agricultural Loan Guarantee Fund; or (3) the Illinois Farmer and Agribusiness Loan Guarantee Fund.

(d) Notwithstanding the provisions of this Section 830-45 with respect to the young farmers and lenders who may obtain State Guarantees, the Authority may promulgate rules establishing the eligibility of young farmers and lenders to participate in the State Guarantee program and the terms, standards, and procedures that will apply, when the Authority finds that emergency conditions in Illinois agriculture have created the need for State Guarantees pursuant to terms, standards, and procedures other than those specified in this Section.

(e) The Authority shall allow for the payment of tuition debt incurred by the young farmer to be eligible for financing and refinancing with the loans awarded pursuant to this Section. The Authority shall allow the an eligible young farmer to pay rent and past rent on land leased to the young farmer with the loans awarded pursuant to this Section.

(Source: P.A. 99-509, eff. 6-24-16.)

(20 ILCS 3501/830-55)

Sec. 830-55. Working Capital Loan Guarantee Programs Program.

(a) The Authority is authorized to issue State Guarantees to lenders for loans to finance needed input costs related to and in connection with planting and raising agricultural crops and commodities in Illinois as well as rental payments for land leased to the farmer for those purposes. Eligible input costs include, but are not limited to, fertilizer, chemicals, feed, seed, fuel, parts, and repairs. At the discretion of the Authority, the farmer, producer, or agribusiness must be able to provide the originating lender with a first lien on the proposed crop or commodity to be raised and an assignment of Federal Crop Insurance sufficient to secure the Working Capital Loan. Additional collateral may be required as deemed necessary by the lender and the Authority.

In addition, the Authority is authorized to issue State Guarantees to lenders for loans to finance or refinance tuition debt incurred by or on behalf of an eligible farmer for the purpose of pursuing an associate's degree in an agriculture field, a bachelor's degree in an agriculture field, or a post-secondary certificate in a agriculture field. Eligible tuition debt includes all fees, administrative costs, and living expenses imposed by the post-secondary education institution.

For the purposes of this Section, an eligible farmer, producer, or agribusiness is a resident of Illinois who is at least 18 years of age and who is a principal operator of a farm or land, who derives at least 50% of annual gross income from farming, and whose debt to asset ratio is not less than 40%. For the purposes of this Section, debt to asset ratio means current outstanding liabilities, including any debt to be financed or refinanced under this Section 830-55, divided by current outstanding assets. The Authority shall establish the maximum permissible debt to asset ratio based on criteria established by the Authority. Lenders shall apply for the State Guarantees on forms provided by the Authority and certify that the application and any other documents submitted are true and correct. The lender or borrower, or both in combination, shall pay an administrative fee as determined by the Authority. The applicant shall be responsible for paying any fee or charge involved in recording mortgages, releases, financing statements, insurance for secondary market issues, and any other similar fee or charge that the Authority may require. The application shall at a minimum contain the borrower's name, address, present credit and financial information, including cash flow statements, financial statements, balance sheets, and any other information pertinent to the application, and the collateral to be used to secure the State Guarantee. In addition, the borrower must certify to the Authority that, at the time the State Guarantee is provided, the borrower will not be delinquent in the repayment of any debt. The lender must agree to charge a fixed or adjustable interest rate that the Authority determines to be below the market rate of interest generally available to the borrower. If both the lender and applicant agree, the interest rate on the State guaranteed loan can be converted to a fixed interest rate at any time during the term of the loan. State Guarantees provided under this Section (i) shall not exceed $500,000 $250,000 per borrower, (ii) shall be repaid annually, and (iii) shall be subject to an annual review and renewal by the lender and the Authority. The State Guarantee may be renewed annually, for a period not to exceed 3 total years per State Guarantee, if the borrower meets financial criteria and other conditions, as established by the Authority. A farmer or agribusiness may use this program more than once provided the aggregate principal amount of State Guarantees under this Section to that farmer or agribusiness does not exceed $500,000 $250,000 annually. No State Guarantee shall be revoked by the Authority without a 90-day notice, in writing, to all parties.

(b) The Authority shall provide a State Guarantee to a lender if:

(i) The borrower pays to the Authority a fee equal to 100 basis points on the loan.

(ii) The application provides collateral acceptable to the Authority that is at least equal to the State Guarantee.

(iii) The lender assumes all responsibility and costs for pursuing legal action on collecting any loan that is delinquent or in default.

(iv) The lender is at risk for the first 15% of the outstanding principal of the note for which the State Guarantee is provided.

(c) The Illinois Agricultural Loan Guarantee Fund, the Illinois Farmer and Agribusiness Loan Guarantee Fund, and the Industrial Project Insurance Fund may be used to secure State Guarantees issued under this Section as provided in Section 830-30, Section 830-35, and subsection (j) of Section 805-20, respectively, or to make direct loans or purchase loan participations under subsection (i) or (r) of Section 801-40. If the Authority exercises its discretion under subsection (j) of Section 805-20 to secure a State Guarantee with the Industrial Project Insurance Fund and also exercises its discretion under this subsection to secure the same State Guarantee with the Illinois Agricultural Loan Guarantee Fund, the Illinois Farmer and Agribusiness Loan Guarantee Fund, or both, all payments by the Authority to satisfy claims against the State Guarantee shall be made from the Industrial Project Insurance Fund, the Illinois Agricultural Loan Guarantee Fund, or the Illinois Farmer and Agribusiness Loan Guarantee Fund, as applicable, in such order and in such amounts as the Authority shall determine.

(d) Notwithstanding the provisions of this Section 830-55 with respect to the borrowers and lenders who may obtain State Guarantees, the Authority may promulgate rules establishing the eligibility of borrowers and lenders to participate in the State Guarantee program and the terms, standards, and procedures that will apply, when the Authority finds that emergency conditions in Illinois agriculture have created the need for State Guarantees pursuant to terms, standards, and procedures other than those specified in this Section.

(Source: P.A. 100-919, eff. 8-17-18; 101-81, eff. 7-12-19.)

Section 99. Effective date. This Act takes effect upon becoming law.