Full Text of HB5419 98th General Assembly
HB5419 98TH GENERAL ASSEMBLY |
| | 98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014 HB5419 Introduced , by Rep. C.D. Davidsmeyer SYNOPSIS AS INTRODUCED: |
| 20 ILCS 3501/830-20 | | 20 ILCS 3501/830-30 | | 20 ILCS 3501/830-35 | | 20 ILCS 3501/830-45 | |
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Amends the Illinois Finance Authority Act. In Sections concerning State guarantees for loans to farmers, provides that the total amount of the guarantees shall not exceed $2,000,000 per farmer (instead of $500,000). Provides that guarantees may be made if the farmer's net worth does not exceed $2,000,000 (instead of $500,000). In a Section concerning guarantees for existing debt, provides that the Illinois Agricultural Loan Guarantee Fund shall guarantee receipt of payment
of 90% (instead of 85%) of the principal and interest owed on the State Guarantee Loan by the
farmer to the guarantee holder. Effective immediately.
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| | | FISCAL NOTE ACT MAY APPLY | |
| | A BILL FOR |
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| 1 | | AN ACT concerning finance.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The Illinois Finance Authority Act is amended by | 5 | | changing Sections 830-20, 830-30, 830-35, and 830-45 as | 6 | | follows:
| 7 | | (20 ILCS 3501/830-20)
| 8 | | Sec. 830-20.
The Authority may not pass a resolution | 9 | | authorizing the
issuance
of any notes or bonds in excess of | 10 | | $2,000,000 $450,000 for any one agricultural real
estate
| 11 | | borrower. In any calendar year after 2007, the $450,000 amount | 12 | | shall be increased by an amount equal to such dollar amount | 13 | | multiplied by the inflation percentage determined under | 14 | | Section 305(c) of the federal Consolidated Farm and Rural | 15 | | Development Act (7 U.S.C. 1925) as of June 18, 2008. Any | 16 | | increase determined under the preceding sentence shall be | 17 | | rounded to the nearest multiple of $100. No proceeds from any | 18 | | bonds issued by the Authority shall be loaned to
any natural | 19 | | person who has a net worth in excess of $2,000,000 $500,000 for | 20 | | the purchase
of
new depreciable agricultural property or to any | 21 | | agribusiness that, including
all
affiliates and subsidiaries, | 22 | | has more than 100 employees and a gross income
exceeding | 23 | | $2,000,000 for the preceding calendar year; provided, however, |
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| 1 | | that
the employee size and gross income limitations shall not | 2 | | apply to any loans to
agribusinesses for research and | 3 | | development purposes, and provided further that
the Authority | 4 | | shall retain the power to waive such limitations for any
| 5 | | agribusiness that, at the time of application, does not operate | 6 | | a facility
within this State.
| 7 | | (Source: P.A. 96-531, eff. 8-14-09.)
| 8 | | (20 ILCS 3501/830-30)
| 9 | | Sec. 830-30. State Guarantees for existing debt.
| 10 | | (a) The Authority is authorized to issue State Guarantees | 11 | | for farmers'
existing
debts held by a lender. For the purposes | 12 | | of this
Section, a farmer shall be a
resident of Illinois, who | 13 | | is a principal operator of a farm or land, at least
50% of | 14 | | whose annual gross income is derived from farming and whose | 15 | | debt to
asset
ratio shall not be less than 40%, except in those | 16 | | cases where the applicant has
previously used the guarantee | 17 | | program there shall be no debt to asset ratio or
income | 18 | | restriction. For the purposes of this
Section, debt to asset | 19 | | ratio shall
mean the current outstanding liabilities of the | 20 | | farmer divided by the current
outstanding assets of the farmer. | 21 | | The Authority shall establish the maximum
permissible debt to | 22 | | asset ratio based on criteria established by the Authority.
| 23 | | Lenders shall apply for the State Guarantees on forms provided | 24 | | by the Authority
and certify that the application and any other | 25 | | documents submitted are true and
correct. The lender or |
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| 1 | | borrower, or both in combination, shall pay an
administrative | 2 | | fee as determined by the Authority. The applicant shall be
| 3 | | responsible for paying any fees or charges involved in | 4 | | recording mortgages,
releases, financing statements, insurance | 5 | | for secondary market issues and any
other similar fees or | 6 | | charges as the Authority may require. The application
shall at | 7 | | a minimum contain the farmer's name, address, present credit | 8 | | and
financial information, including cash flow statements, | 9 | | financial statements,
balance sheets, and any other | 10 | | information pertinent to the application, and the
collateral to | 11 | | be used to secure the State Guarantee. In addition, the lender
| 12 | | must agree to bring the farmer's debt to a current status at | 13 | | the time the State
Guarantee is provided and must also agree to | 14 | | charge a fixed or adjustable
interest rate which the Authority | 15 | | determines to be below the market rate of
interest generally | 16 | | available to the borrower. If both the lender and applicant
| 17 | | agree, the interest rate on the State Guarantee Loan can be | 18 | | converted to a fixed
interest rate at any time during the term | 19 | | of the loan.
Any State Guarantees provided under this
Section | 20 | | (i) shall not exceed $2,000,000 $500,000
per farmer, (ii) shall | 21 | | be set up on a payment schedule not to exceed 30 years,
and | 22 | | shall be no longer than 30 years in duration, and (iii) shall | 23 | | be subject to
an annual review and renewal by the lender and | 24 | | the Authority; provided that
only
one such State Guarantee | 25 | | shall be outstanding per farmer at any one time. No
State | 26 | | Guarantee shall be revoked by the Authority without a 90-day |
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| 1 | | notice, in
writing, to all parties. In those cases where the | 2 | | borrower has not previously
used the guarantee program, the | 3 | | lender shall not call due any loan during the
first 3 years for | 4 | | any reason except for lack of performance or insufficient
| 5 | | collateral. The lender can review and withdraw or continue with | 6 | | the State
Guarantee on an annual basis after the first 3 years | 7 | | of the loan, provided a
90-day notice, in writing, to all | 8 | | parties has been given.
| 9 | | (b) The Authority shall provide or renew a State Guarantee | 10 | | to a lender if:
| 11 | | (i) A fee equal to 25 basis points on the loan is paid | 12 | | to the Authority on
an
annual
basis by the lender.
| 13 | | (ii) The application provides collateral acceptable to | 14 | | the
Authority that is at least equal to the State's portion | 15 | | of the Guarantee to be
provided.
| 16 | | (iii) The lender assumes all responsibility and costs | 17 | | for pursuing
legal action on collecting any loan that is | 18 | | delinquent or in default.
| 19 | | (iv) The
lender is responsible for the first 10% 15% of | 20 | | the outstanding principal of the
note
for which the State | 21 | | Guarantee has been applied.
| 22 | | (c) There is hereby created outside of the State treasury a | 23 | | special fund to
be
known as the Illinois Agricultural Loan | 24 | | Guarantee Fund. The State Treasurer
shall be custodian of this | 25 | | Fund. Any amounts in the Illinois Agricultural Loan
Guarantee | 26 | | Fund not currently needed to meet the obligations of the Fund |
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| 1 | | shall
be
invested as provided by law, and all interest earned | 2 | | from these investments
shall be deposited into the Fund until | 3 | | the Fund reaches the maximum amount
authorized in this Act; | 4 | | thereafter, interest earned shall be deposited into the
General | 5 | | Revenue Fund. After September 1, 1989, annual investment | 6 | | earnings equal
to 1.5% of the Fund shall remain in the Fund to | 7 | | be used for the purposes
established in
Section 830-40 of this | 8 | | Act. The Authority is authorized to
transfer to the Fund such | 9 | | amounts as are necessary to satisfy claims during the
duration | 10 | | of the State Guarantee program to secure State Guarantees | 11 | | issued under
this
Section. If for any reason the General | 12 | | Assembly fails to make an
appropriation sufficient to meet | 13 | | these obligations, this Act shall constitute
an
irrevocable and | 14 | | continuing appropriation of an amount necessary to secure
| 15 | | guarantees as defaults occur and the irrevocable and continuing | 16 | | authority for,
and direction to, the State Treasurer and the | 17 | | Comptroller to make the necessary
transfers to the Illinois | 18 | | Agricultural Loan Guarantee Fund, as directed by the
Governor, | 19 | | out of the General Revenue Fund. Within 30 days after November | 20 | | 15,
1985, the Authority may transfer up to $7,000,000 from | 21 | | available appropriations
into the Illinois Agricultural Loan | 22 | | Guarantee Fund for the purposes of this
Act.
Thereafter, the | 23 | | Authority may transfer additional amounts into the Illinois
| 24 | | Agricultural Loan Guarantee Fund to secure guarantees for | 25 | | defaults as defaults
occur. In the event of default by the | 26 | | farmer, the lender shall be entitled to,
and the Authority |
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| 1 | | shall direct payment on, the State Guarantee after 90 days of
| 2 | | delinquency. All payments by the Authority shall be made from | 3 | | the Illinois
Agricultural Loan Guarantee Fund to satisfy claims | 4 | | against the State Guarantee.
The Illinois Agricultural Loan | 5 | | Guarantee Fund shall guarantee receipt of payment
of 90% the | 6 | | 85% of the principal and interest owed on the State Guarantee | 7 | | Loan by the
farmer to the guarantee holder. It shall be the | 8 | | responsibility of the lender to
proceed with the collecting and | 9 | | disposing of collateral on the State Guarantee
within 14 months | 10 | | of the time the State Guarantee is declared delinquent;
| 11 | | provided, however, that the lender shall not collect or dispose | 12 | | of collateral on
the State Guarantee without the express | 13 | | written prior approval of the Authority.
If the lender does not | 14 | | dispose of the collateral within 14 months, the lender
shall be | 15 | | liable to repay to the State interest on the State Guarantee | 16 | | equal to
the same rate which the lender charges on the State | 17 | | Guarantee; provided,
however, that the Authority may extend the | 18 | | 14-month period for a lender in the
case of bankruptcy or | 19 | | extenuating circumstances. The Fund shall be reimbursed
for any | 20 | | amounts paid under this
Section upon liquidation of the | 21 | | collateral. The
Authority, by resolution of the Board, may | 22 | | borrow sums from the Fund and
provide
for repayment as soon as | 23 | | may be practical upon receipt of payments of principal
and | 24 | | interest by a farmer. Money may be borrowed from the Fund by | 25 | | the Authority
for the sole purpose of paying certain interest | 26 | | 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 830-30 | 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. 93-205, eff. 1-1-04.)
| 13 | | (20 ILCS 3501/830-35)
| 14 | | Sec. 830-35. State Guarantees for loans to farmers and | 15 | | agribusiness;
eligibility. | 16 | | (a) The Authority is authorized to issue State Guarantees | 17 | | to lenders for
loans
to eligible farmers and agribusinesses for | 18 | | purposes set forth in this
Section.
For purposes of this
| 19 | | Section, an eligible farmer shall be a resident of Illinois
(i) | 20 | | who is principal operator of a farm or land, at least 50% of | 21 | | whose annual
gross income is derived from farming, (ii) whose | 22 | | annual total sales of
agricultural products, commodities, or | 23 | | livestock exceeds $20,000, and (iii)
whose net worth does not | 24 | | exceed $2,000,000 $500,000 . An eligible agribusiness shall be
| 25 | | that as defined in
Section 801-10 of this Act.
The Authority |
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| 1 | | may approve applications by farmers and agribusinesses that
| 2 | | promote diversification of the farm economy of this State | 3 | | through the growth
and
development of new crops or livestock | 4 | | not customarily grown or produced in this
State or that | 5 | | emphasize a vertical integration of grain or livestock produced
| 6 | | or
raised in this State into a finished agricultural product | 7 | | for consumption or
use. "New crops or livestock not customarily | 8 | | grown or produced in this State"
shall not include corn, | 9 | | soybeans, wheat, swine, or beef or dairy cattle.
"Vertical | 10 | | integration of grain or livestock produced or raised in this | 11 | | State"
shall include any new or existing grain or livestock | 12 | | grown or produced in this
State.
Lenders shall apply for the | 13 | | State Guarantees on forms provided by the
Authority,
certify | 14 | | that the application and any other documents submitted are true | 15 | | and
correct, and pay an administrative fee as determined by the | 16 | | Authority. The
applicant shall be responsible for paying any | 17 | | fees or charges involved in
recording mortgages, releases, | 18 | | financing statements, insurance for secondary
market issues | 19 | | and any other similar fees or charges as the Authority may
| 20 | | require. The application shall at a minimum contain the | 21 | | farmer's or
agribusiness' name, address, present credit and | 22 | | financial information,
including cash flow statements, | 23 | | financial statements, balance sheets, and any
other
| 24 | | information pertinent to the application, and the collateral to | 25 | | be used to
secure the State Guarantee. In addition, the lender | 26 | | must agree to charge an
interest rate, which may vary, on the |
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| 1 | | loan that the Authority determines to be
below the market rate | 2 | | of interest generally available to the borrower. If both
the | 3 | | lender and applicant agree, the interest rate on the State | 4 | | Guarantee Loan
can be converted to a fixed interest rate at any | 5 | | time during the term of the
loan.
Any State Guarantees provided | 6 | | under this
Section (i) shall not exceed $2,000,000 $500,000
per | 7 | | farmer or an amount as determined by the Authority on a | 8 | | case-by-case
basis for an agribusiness, (ii) shall not exceed a | 9 | | term of 15 years, and (iii)
shall be subject to an annual | 10 | | review and renewal by the lender and the
Authority; provided | 11 | | that only one such State Guarantee shall be made per farmer
or | 12 | | agribusiness, except that additional State Guarantees may be | 13 | | made for
purposes of expansion of projects financed in part by | 14 | | a previously issued State
Guarantee. No State Guarantee shall | 15 | | be revoked by the Authority without a
90-day notice, in | 16 | | writing, to all parties. The lender shall not call due any
loan
| 17 | | for any reason except for lack of performance, insufficient | 18 | | collateral, or
maturity. A lender may review and withdraw or | 19 | | continue with a State Guarantee
on an annual basis after the | 20 | | first 5 years following closing of the loan
application if the | 21 | | loan contract provides for an interest rate that shall not
| 22 | | vary. A lender shall not withdraw a State Guarantee if the loan | 23 | | contract
provides for an interest rate that may vary, except | 24 | | for reasons set forth
herein.
| 25 | | (b) The Authority shall provide or renew a State Guarantee | 26 | | to a lender if:
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| 1 | | (i) A fee equal to 25 basis points on the loan is paid | 2 | | to the Authority on
an annual
basis by the lender.
| 3 | | (ii) The application provides collateral acceptable to | 4 | | the
Authority that is at least equal to the State's portion | 5 | | of the Guarantee to be
provided.
| 6 | | (iii) The lender assumes all responsibility and costs | 7 | | for pursuing
legal action on collecting any loan that is | 8 | | delinquent or in default.
| 9 | | (iv) The
lender is responsible for the first 10% 15% of | 10 | | the outstanding principal of the
note
for which the State | 11 | | Guarantee has been applied.
| 12 | | (c) There is hereby created outside of the State treasury a | 13 | | special fund to
be
known as the Illinois Farmer and | 14 | | Agribusiness Loan Guarantee Fund. The State
Treasurer shall be | 15 | | custodian of this Fund. Any amounts in the Fund not
currently | 16 | | needed to meet the obligations of the Fund shall be invested as
| 17 | | provided by law, and all interest earned from these investments | 18 | | shall be
deposited into the Fund until the Fund reaches the | 19 | | maximum amounts authorized
in
this Act; thereafter, interest | 20 | | earned shall be deposited into the General
Revenue Fund. After | 21 | | September 1, 1989, annual investment earnings equal to 1.5%
of | 22 | | the Fund shall remain in the Fund to be used for the purposes | 23 | | established in
Section 830-40 of this Act. The Authority is | 24 | | authorized to transfer such
amounts
as are necessary to satisfy | 25 | | claims from available appropriations and from fund
balances of | 26 | | the Farm Emergency Assistance Fund as of June 30 of each year |
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| 1 | | to
the
Illinois Farmer and Agribusiness Loan Guarantee Fund to | 2 | | secure State Guarantees
issued under this
Section and
Sections | 3 | | 830-45, 830-50, and 830-55. If for any reason the
General | 4 | | Assembly fails to make an appropriation sufficient to meet | 5 | | these
obligations, this Act shall constitute an irrevocable and | 6 | | continuing
appropriation of an amount necessary to secure | 7 | | guarantees as defaults occur and
the irrevocable and continuing | 8 | | authority for, and direction to, the State
Treasurer and the | 9 | | Comptroller to make the necessary transfers to the Illinois
| 10 | | Farmer and Agribusiness Loan Guarantee Fund, as directed by the | 11 | | Governor, out
of
the General Revenue Fund. In the event of | 12 | | default by the borrower on State
Guarantee Loans under this
| 13 | | Section,
Section 830-45,
Section 830-50, or Section 830-55, the | 14 | | lender
shall be entitled to, and the Authority shall direct | 15 | | payment on, the State
Guarantee after 90 days of delinquency. | 16 | | All payments by the Authority shall be
made from the Illinois | 17 | | Farmer and Agribusiness Loan Guarantee Fund to satisfy
claims | 18 | | against the State Guarantee. It shall be the responsibility of | 19 | | the
lender to proceed with the collecting and disposing of | 20 | | collateral on the State
Guarantee under this
Section,
Section | 21 | | 830-45,
Section 830-50, or Section 830-55 within 14 months of
| 22 | | the time the State Guarantee is declared delinquent. If the | 23 | | lender does not
dispose of the collateral within 14 months, the | 24 | | lender shall be liable to repay
to the State interest on the | 25 | | State Guarantee equal to the same rate that the
lender charges | 26 | | on the State Guarantee, provided that the Authority shall have
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| 1 | | the authority to extend the 14-month period for a lender in the | 2 | | case of
bankruptcy or extenuating circumstances. The Fund shall | 3 | | be reimbursed for any
amounts paid under this
Section,
Section | 4 | | 830-45,
Section 830-50, or Section 830-55 upon liquidation
of | 5 | | the collateral.
The Authority, by resolution of the Board, may | 6 | | borrow sums from the Fund and
provide for repayment as soon as | 7 | | may be practical upon receipt of payments of
principal and | 8 | | interest by a borrower on State Guarantee Loans under this
| 9 | | Section,
Section 830-45,
Section 830-50, or Section 830-55. | 10 | | Money may be borrowed from the Fund by
the Authority for the | 11 | | sole purpose of paying certain interest costs for
borrowers | 12 | | associated with selling a loan subject to a State Guarantee | 13 | | under
this
Section,
Section 830-45,
Section 830-50, or Section | 14 | | 830-55 in a secondary market as may be deemed
reasonable and | 15 | | necessary by the Authority.
| 16 | | (d) Notwithstanding the provisions of this
Section 830-35 | 17 | | with respect to the
farmers, agribusinesses, and lenders who | 18 | | may obtain State Guarantees, the
Authority may promulgate rules | 19 | | establishing the eligibility of farmers,
agribusinesses, and | 20 | | lenders to participate in the State Guarantee program and
the | 21 | | terms, standards, and procedures that will apply, when the | 22 | | Authority finds
that emergency conditions in Illinois | 23 | | agriculture have created the need for
State Guarantees pursuant | 24 | | to terms, standards, and procedures other than those
specified | 25 | | in this
Section.
| 26 | | (Source: P.A. 96-897, eff. 5-24-10.)
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| 1 | | (20 ILCS 3501/830-45)
| 2 | | Sec. 830-45. Young Farmer Loan Guarantee Program.
| 3 | | (a) The Authority is authorized to issue State Guarantees | 4 | | to lenders for
loans
to finance or refinance debts of young | 5 | | farmers. For the purposes of this
Section, a young farmer is a | 6 | | resident of Illinois who is at least 18 years of
age and who is | 7 | | a principal operator of a farm or land, who derives at least | 8 | | 50%
of annual gross income from farming, whose net worth is not | 9 | | less than $10,000
and whose debt to asset ratio is not less | 10 | | than 40%. For the purposes of this
Section, debt to asset ratio | 11 | | means current outstanding liabilities, including
any debt to be | 12 | | financed or refinanced under this
Section 830-45, divided by
| 13 | | current outstanding assets. The Authority shall establish the | 14 | | maximum
permissible debt to asset ratio based on criteria | 15 | | established by the Authority.
Lenders shall apply for the State | 16 | | Guarantees on forms provided by the Authority
and certify that | 17 | | the application and any other documents submitted are true and
| 18 | | correct. The lender or borrower, or both in combination, shall | 19 | | pay an
administrative fee as determined by the Authority. The | 20 | | applicant shall be
responsible for paying any fee or charge | 21 | | involved in recording mortgages,
releases, financing | 22 | | statements, insurance for secondary market issues, and any
| 23 | | other similar fee or charge that the Authority may require. The | 24 | | application
shall at a minimum contain the young farmer's name, | 25 | | address, present credit and
financial information, including |
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| 1 | | cash flow statements, financial statements,
balance sheets, | 2 | | and any other information pertinent to the application, and the
| 3 | | collateral to be used to secure the State Guarantee. In | 4 | | addition, the borrower
must certify to the Authority that, at | 5 | | the time the State Guarantee is
provided,
the borrower will not | 6 | | be delinquent in the repayment of any debt. The lender
must | 7 | | agree to charge a fixed or adjustable interest rate that the | 8 | | Authority
determines to be below the market rate of interest | 9 | | generally available to the
borrower. If both the lender and | 10 | | applicant agree, the interest rate on the
State guaranteed loan | 11 | | can be converted to a fixed interest rate at any time
during | 12 | | the term of the loan.
State Guarantees provided under this
| 13 | | Section (i) shall not exceed $2,000,000 $500,000 per
young | 14 | | farmer, (ii) shall be set up on a payment schedule not to | 15 | | exceed 30
years,
but shall be no longer than 15 years in | 16 | | duration, and (iii) shall be subject to
an annual review and | 17 | | renewal by the lender and the Authority. A young farmer
may
use | 18 | | this program more than once provided the aggregate principal | 19 | | amount of
State
Guarantees under this
Section to that young | 20 | | farmer does not exceed $2,000,000 $500,000 . No
State Guarantee | 21 | | shall be revoked by the Authority without a 90-day notice, in
| 22 | | writing, to all parties.
| 23 | | (b) The Authority shall provide or renew a State Guarantee | 24 | | to a lender if:
| 25 | | (i) The lender pays a fee equal to 25 basis points on | 26 | | the loan to the
Authority on
an annual basis.
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| 1 | | (ii) The application provides collateral acceptable to | 2 | | the
Authority that is at least equal to the State | 3 | | Guarantee.
| 4 | | (iii) The lender
assumes all responsibility and costs | 5 | | for pursuing legal action on collecting
any
loan that is | 6 | | delinquent or in default.
| 7 | | (iv) The lender is at risk for the
first 10% 15% of the | 8 | | outstanding principal of the note for which the State
| 9 | | Guarantee
is provided.
| 10 | | (c) The Illinois Agricultural Loan Guarantee Fund and the | 11 | | Illinois Farmer and Agribusiness Loan Guarantee Fund may be | 12 | | used to
secure State Guarantees issued under this
Section as | 13 | | provided in
Section 830-30 and Section 830-35, respectively.
| 14 | | (d) Notwithstanding the provisions of this
Section 830-45 | 15 | | with respect to the
young farmers and lenders who may obtain | 16 | | State Guarantees, the Authority may
promulgate rules | 17 | | establishing the eligibility of young farmers and lenders to
| 18 | | participate in the State Guarantee program and the terms, | 19 | | standards, and
procedures that will apply, when the Authority | 20 | | finds that emergency conditions
in Illinois agriculture have | 21 | | created the need for State Guarantees pursuant to
terms, | 22 | | standards, and procedures other than those specified in this
| 23 | | Section.
| 24 | | (Source: P.A. 96-897, eff. 5-24-10.)
| 25 | | Section 99. Effective date. This Act takes effect upon | 26 | | becoming law.
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