HB5907 98TH GENERAL ASSEMBLY

LRB098 17666 HLH 52780 b

98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
HB5907

Introduced , by Rep. John D. Anthony

SYNOPSIS AS INTRODUCED:

20 ILCS 3501/830-47 new

Amends the Illinois Finance Authority Act. Provides that the Authority is authorized to issue State guarantees to lenders for loans to small family farm operations, operators of community-supported agriculture, and beginning farmers. Provides that those guarantees (i) shall not exceed $35,000 per qualified applicant, (ii) shall be set up on a payment schedule not to exceed 7 years, except that annual operating loans must be repaid within 12 months after the agricultural commodities are sold, and (iii) shall be subject to annual review and renewal by the lender and the Authority. Provides that the Illinois Agricultural Loan Guarantee Fund and the Illinois Farmer and Agribusiness Loan Guarantee Fund may be used to secure those guarantees.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning State government.

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 adding Section 830-47 as follows:

(20 ILCS 3501/830-47 new)

Sec. 830-47. Microloans for small and beginning farmers.

(a) The Authority is authorized to issue State guarantees to lenders for loans to small family farm operations, operators of community-supported agriculture, and beginning farmers. A qualified applicant under this Section is a resident of Illinois who is at least 18 years of age and who is a principal operator of a farm or land, 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, divided by current outstanding assets. The Authority shall establish the maximum permissible debt to asset ratio based on criteria established by the Authority.

(b) State guarantees provided under this Section (i) shall not exceed $35,000 per qualified applicant, (ii) shall be set up on a payment schedule not to exceed 7 years, except that annual operating loans must be repaid within 12 months after the agricultural commodities are sold, and (iii) shall be subject to annual review and renewal by the lender and the Authority.

(c) Loans under this Section may be used for the following purposes, without limitation:

(1) initial start-up expenses;

(2) annual expenses such as seed, fertilizer, utilities, and land rents;

(3) marketing and distribution expenses;

(4) family living expenses;

(5) purchase of livestock, equipment, and other materials essential to farm operations;

(6) minor farm improvements such as wells and coolers;

(7) hoop houses to extend the growing season;

(8) essential tools;

(9) irrigation; and

(10) delivery vehicles.

(d) 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 applicant'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 is not 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. An applicant may use this program more than once. No State guarantee shall be revoked by the Authority without a 90-day notice, in writing, to all parties.

(e) The Illinois Agricultural Loan Guarantee Fund and the Illinois Farmer and Agribusiness Loan Guarantee Fund may be used to secure State guarantees issued under this Section.

(f) The Authority may adopt rules establishing the eligibility of farmers and lenders to participate in the program under this Section.