7 U.S.C. § 1946 | Liability of borrower

(a)

Determination of interest rates

(1)

1 See References in Text note below.

The Secretary shall make all loans under this subchapter upon the full personal liability of the borrower and upon such security as the Secretary may prescribe. The interest rates on such loans, except for guaranteed loans and loans as provided in paragraphs (2) and (3), shall be as determined by the Secretary, but not in excess of the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of such loans, plus an additional charge not to exceed 1 per centum as determined by the Secretary, which charge shall be deposited in the Rural Development Insurance Fund or the Agricultural Credit Insurance Fund, as appropriate, and adjusted to the nearest one-eighth of 1 per centum. The interest rate on any guaranteed loan made under this subchapter shall be such rate as may be agreed upon by the borrower and lender, but not in excess of a rate as may be determined by the Secretary.

(2)

¹ The interest rate on a microloan to a beginning farmer or rancher or veteran farmer or rancher (as defined in section 2279(e)  of this title), or any loan (other than a guaranteed loan) to a low income, limited resource borrower under this subchapter shall not be—

(A)

greater than the sum of—

(i)

an amount that does not exceed one-half of the current average market yield on outstanding marketable obligations of the United States with maturities of 5 years; and

(ii)

an amount not exceeding 1 percent per year, as the Secretary determines is appropriate; or

(B)

less than 5 percent per year.

(b)

Payment period; consolidation and rescheduling of loans

section 1981b of this titleLoans made under this subchapter shall be payable in not to exceed seven years. The Secretary may consolidate or reschedule outstanding loans for payment over a period not to exceed seven years (or, in the case of loans for farm operating purposes, fifteen years) from the date of such consolidation or rescheduling, and the amount of unpaid principal and interest of the prior loans so consolidated or rescheduled shall not create a new charge against any loan levels authorized by law. A new loan may be included in a consolidation. Such new loan shall be charged against any loan level authorized by law. Except as otherwise provided for farm loans under , the interest rate on such consolidated or rescheduled loans, other than guaranteed loans, may be changed by the Secretary to a rate not to exceed the rate being charged for loans made under this subchapter at the time of the consolidation or rescheduling. The interest rate on any guaranteed loan under this subchapter that may be consolidated or rescheduled for payment shall be such rate as may be agreed upon by the borrower and the lender, but not in excess of a rate as may be determined by the Secretary.

(c)

Line-of-credit loans

(1)

In general

A loan made or guaranteed by the Secretary under this subchapter may be in the form of a line-of-credit loan.

(2)

Term

A line-of-credit loan under paragraph (1) shall terminate not later than 5 years after the date that the loan is made or guaranteed.

(3)

Eligibility

For purposes of determining eligibility for a farm operating loan under this subchapter, each year during which a farmer or rancher takes an advance or draws on a line-of-credit loan the farmer or rancher shall be considered to have received an operating loan for 1 year.

(4)

Termination of delinquent loans

If a borrower does not pay an installment on a line-of-credit loan on schedule, the borrower may not take an advance or draw on the line-of-credit, unless the Secretary determines that—

(A)

the borrower’s failure to pay on schedule was due to unusual conditions that the borrower could not control; and

(B)

the borrower will reduce the line-of-credit balance to the scheduled level at the end of—

(i)

the production cycle; or

(ii)

the marketing of the borrower’s agricultural products.

(5)

Agricultural commodities

A line-of-credit loan may be used to finance the production or marketing of an agricultural commodity that—

(A)

is eligible for a price support program of the Department of Agriculture; or

(B)

April 4, 1996 was eligible for a price support program of the Department of Agriculture on the day before .

Pub. L. 87–128, title III, § 316Aug. 8, 196175 Stat. 311 Pub. L. 90–488, § 10Aug. 15, 196882 Stat. 771 Pub. L. 95–334, title I, § 117Aug. 4, 197892 Stat. 426 Pub. L. 97–35, title I, § 160(b)Aug. 13, 198195 Stat. 377 Pub. L. 98–258, title VI, § 604(b)Apr. 10, 198498 Stat. 139 Pub. L. 101–624, title XVIII, § 1803(b)Nov. 28, 1990104 Stat. 3818 Pub. L. 104–127, title VIApr. 4, 1996110 Stat. 1089 Pub. L. 113–79, title V, § 5106(b)(3)Feb. 7, 2014128 Stat. 838(, , ; , , ; , , ; , , ; , , ; , , ; , §§ 614, 661(g), , , 1107; , , .)

Editorial Notes

References in Text

Pub. L. 104–127, title VI, § 661(g)Apr. 4, 1996110 Stat. 1107Paragraph (3), referred to in subsec. (a)(1), was repealed by , , .

Section 2279(e) of this title section 2279(a) of this title section 12301(b)(3) of Pub. L. 115–334, referred to in subsec. (a)(2), was redesignated by .

Amendments

Pub. L. 113–79 section 2279(e) of this title2014—Subsec. (a)(2). inserted “a microloan to a beginning farmer or rancher or veteran farmer or rancher (as defined in ), or” after “The interest rate on”.

Pub. L. 104–127, § 661(g)section 1942(a) of this title section 1927(a)(6)(C) of this title1996—Subsec. (a)(3). , struck out par. (3) which read as follows: “The interest rate on any loan (other than a guaranteed loan) made or insured under clause (5) of for activities that involve the use of prime farmland as defined in shall be the interest rate otherwise applicable under this section increased by 2 per centum per annum.”

Pub. L. 104–127, § 614Subsec. (c). , added subsec. (c).

Pub. L. 101–6241990—Subsec. (a)(2). amended par. (2) generally. Prior to amendment, par. (2) read as follows: “The interest rate on any loan (other than a guaranteed loan) to a low-income, limited resource borrower under this subchapter shall be the interest rate otherwise applicable under this section reduced by 3 per centum per annum.”

Pub. L. 98–258 section 1981b of this title1984—Subsec. (b). inserted “(or, in the case of loans for farm operating purposes, fifteen years)” and substituted “Except as otherwise provided for farm loans under , the interest rate” for “The interest rate”.

Pub. L. 97–351981—Subsec. (a). redesignated existing provisions as par. (1), inserted reference to loans guaranteed under pars. (2) and (3), and added pars. (2) and (3).

Pub. L. 95–3341978— designated existing provisions as subsec. (a), inserted provisions relating to depositing of charges and provisions relating to interest rates on guaranteed loans, struck out provisions relating to payment and renewal of loans, and added subsec. (b).

Pub. L. 90–4881968— substituted provisions for determination of interest rate by taking into consideration current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of the loans, adjusted to the nearest one-eighth of 1 per centum, plus not to exceed 1 per centum per annum as determined by the Secretary, for former prohibition of an interest rate exceeding 5 per centum per annum.

Statutory Notes and Related Subsidiaries

Effective Date of 1981 Amendment

Pub. L. 97–35Sept. 30, 1981section 160(c) of Pub. L. 97–35 section 1927 of this titleAmendment by applicable to loans made after , see , set out as a note under .