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234.90

234.90 Agricultural production loan guarantees.

234.90(1)

(1) Definitions. In this section:

234.90(1)(a)

(a) "Agricultural commodity" has the meaning given under s. 94.67 (2).

234.90(1)(ad)

(ad) "Agricultural production loan" means a loan to a farmer to finance the purchase of fertilizer, seed, fuel, pesticides, tillage services, crop insurance, animal feed or any other service or consumable good necessary to produce an agricultural commodity.

234.90(1)(ag)

(ag) "Dairy plant" has the meaning given in s. 97.20 (1) (a).

234.90(1)(b)

(b) "Farmer" has the meaning given under s. 102.04 (3).

234.90(1)(c)

(c) "Guaranteed loan" means an agricultural production loan which is guaranteed by the authority.

234.90(1)(cp)

(cp) "Milk" has the meaning given in s. 97.22 (1) (e).

234.90(1)(d)

(d) "Participating lender" means a bank, production credit association, credit union, savings bank, savings and loan association or other person who makes agricultural production loans and who has entered into an agreement with the authority under s. 234.93 (2) (a).

234.90(2)

(2) Eligible loans. Except as provided in sub. (3j), an agricultural production loan made by a participating lender is eligible for guarantee of collection from the Wisconsin development reserve fund under s. 234.93 if all of the following apply:

234.90(2)(a)

(a) The loan is to finance production of an agricultural commodity.

234.90(2)(b)

(b) In order to maximize the benefits of the program under this section, the total outstanding principal amount of all loans to the borrower that are guaranteed under this section will not exceed an amount set annually, no later than December 1, by the authority that is not less than $30,000 nor more than $100,000. For purposes of adjusting the total outstanding principal amount of all loans to a borrower under this paragraph, the authority shall consider changes in the index of prices paid by farmers published by the federal department of agriculture.

234.90(2)(bm)

(bm) If the loan is one for which the borrower is eligible under sub. (3g), the amount of that loan does not exceed the amount of the payment, excluding interest or penalties if any, owed to the borrower by the insolvent or bankrupt dairy plant, subject to par. (b).

234.90(2)(c)

(c) The rate of interest on the loan, including any origination fees or other charges relating to the loan, does not exceed a rate determined by the authority after considering the conditions of the financial market.

234.90(2)(d)

(d) If the loan is one to which sub. (5) applies, the rate of interest on the loan for which the borrower is obligated, including any origination fees or other charges relating to the loan, does not exceed the rate determined under par. (c), minus 2%.

234.90(2)(e)

(e) The participating lender shall pay directly any supplier of fertilizer, seed, fuel, pesticides, tillage services, crop insurance, animal feed or other service or consumable good necessary to produce an agricultural commodity, if the borrower obtains the loan to pay that supplier.

234.90(2)(f)

(f) The participating lender obtains a security interest for repayment of the loan in the agricultural commodity resulting from use of the loan proceeds.

234.90(2)(g)

(g) Unless waived by the authority, the borrower procures an insurance policy which protects the agricultural commodity to be financed with the proceeds of the loan against risk of loss, and the proceeds of which are payable to the participating lender.

234.90(2)(h)

(h) The term of the loan does not extend after March 31 of the calendar year following the calendar year in which the participating lender granted the loan.

234.90(2)(i)

(i) The proceeds of the loan may not be applied to the outstanding balance of any other loan, except that the proceeds may be used to refinance a loan under this section, subject to sub. (3n).

234.90(2)(j)

(j) If the loan is one for which the borrower is eligible under sub. (3g), the terms of the loan require the borrower to pay to the authorized lender, in repayment of the loan, money received from or on behalf of the bankrupt or insolvent dairy plant, immediately upon receipt of the money.

234.90(3)

(3) Eligible farmers. Except as provided under subs. (3g) and (3j), a farmer is eligible for a guaranteed loan if all of the following apply:

234.90(3)(a)

(a) The farmer does not meet the participating lender's minimum standards of creditworthiness to receive an agricultural production loan in the normal course of the participating lender's business.

234.90(3)(b)

(b) The amount of the farmer's debts totals at least 40% of the amount of the farmer's assets.

234.90(3)(c)

(c) In the judgment of the participating lender, it is reasonably likely that if the farmer receives a guaranteed loan the farmer's assets, cash flow and managerial ability are sufficient to preclude voluntary or involuntary liquidation before April 1 of the calendar year following the calendar year in which the participating lender granted the loan.

234.90(3)(d)

(d) The farmer's name does not appear on the statewide support lien docket under s. 49.854 (2) (b) or, if the farmer's name appears on that docket, the farmer provides to the authority a payment agreement that has been approved by the county child support agency under s. 59.53 (5) and that is consistent with rules promulgated under s. 49.858 (2) (a).

234.90(3g)

(3g) Eligible dairy farmer. Except as provided in sub. (3j), a farmer is eligible for a guaranteed loan under this subsection if all of the following apply:

234.90(3g)(a)

(a) The farmer has not been paid for milk provided to a dairy plant because of the bankruptcy or insolvency of the dairy plant.

234.90(3g)(b)

(b) In the judgment of the participating lender, it is reasonably likely that if the farmer receives a guaranteed loan the farmer's assets, cash flow and managerial ability are sufficient to preclude voluntary or involuntary liquidation before April 1 of the calendar year following the calendar year in which the participating lender granted the loan.

234.90(3g)(c)

(c) The farmer's name does not appear on the statewide support lien docket under s. 49.854 (2) (b) or, if the farmer's name appears on that docket, the farmer provides to the authority a payment agreement that has been approved by the county child support agency under s. 59.53 (5) and that is consistent with rules promulgated under s. 49.858 (2) (a).

234.90(3j)

(3j) Emergency eligibility criteria. The authority may guarantee a loan to a farmer using eligibility criteria determined by the authority that differ from the criteria under subs. (2) to (3g) if all of the following apply:

234.90(3j)(a)

(a) The governor has determined that an emergency situation exists and that the criteria under subs. (2) to (3g) prevent the authority from making an adequate response to the emergency situation.

234.90(3j)(b)

(b) The authority has submitted to the joint committee on finance for review under s. 13.10 the emergency eligibility criteria that it proposes to use, and the joint committee on finance has approved the use of the criteria for the emergency situation.

234.90(3m)

(3m) Extension. A participating lender may extend the term of a loan until no later than June 30 of the calendar year following the calendar year in which the participating lender granted the loan.

234.90(3n)

(3n) Refinancing.

234.90(3n)(a)

(a) Except as provided in par. (b), proceeds of a guaranteed loan may be used to refinance a guaranteed loan no more than one time.

234.90(3n)(b)

(b) The proceeds of a guaranteed loan may be used to refinance a guaranteed loan that has been refinanced one time if at least 60% of the principal amount of the refinanced guaranteed loan has been repaid.

234.90(3p)

(3p) Installment payment of certain loans. An authorized lender may require a borrower to repay a loan described in sub. (3g) in installments.

234.90(4)

(4) Guarantee. The authority shall guarantee repayment of 90 percent of the principal, if less than $50,000, or 80 percent of the principal, if $50,000 or more, of any agricultural production loan eligible for guarantee under sub. (2) made to a farmer eligible for a guaranteed loan under sub. (3) or (3g).

234.90(5)

(5) Interest reduction. If at the time of origination or extension the interest rate on a guaranteed loan and the prime lending rate as reported by the federal reserve board in federal reserve statistical release H. 15 each equals or exceeds 10%, the authority shall pay, from the moneys in the Wisconsin development reserve fund, to the participating lender making the loan, an amount equal to 2% of the principal amount of the loan.

234.90(6)

(6) Review. The authority shall annually review the program under this section for the purpose of maximizing the benefits of the program.

234.90 - ANNOT.

History: 1985 a. 9, 29, 153, 332, 334; 1987 a. 7, 27, 178, 421; 1989 a. 1, 10, 31, 336; 1991 a. 4, 39, 221; 1993 a. 1; 1995 a. 5, 150, 404; 1999 a. 9; 2001 a. 16; 2003 a. 236.