§155-5.5  Loans guaranteed by the
department.  (a)  The department of agriculture may guarantee up to ninety
per cent of the principal balance of a loan, plus interest due thereon, made to
a qualified farmer, qualified food manufacturer, or cooperative by a private
lender; provided that at no time shall the aggregate amount of the State's
liability, contingent or otherwise, on loans guaranteed under this section and
sections 155-5, 155-6, and 155-6.5 exceed $10,000,000.



(b)  Loans guaranteed under this section shall
be limited by the provisions of sections 155-9 through 155-13 for purposes of
classes "A", "B", "C", and "E";
provided that class "E" loans to food manufacturers shall not be
subject to section 155-10.  No class "D" and "F" loans
shall be made under this section.



(c)  Loans made under this section shall not be
subject to the restrictions in section 155-3.



(d)  Interest charged on a guaranteed loan made
under this section shall not be more than two percentage points above the prime
rate charged by the lender.



(e)  When the application for a guaranteed loan
has been approved by the department, the department shall issue to the lender a
guaranty for that percentage of the loan on which it guarantees payment of
principal and interest.  The lender shall collect all payments from the
borrower and otherwise service the loan.



(f)  In return for the department's guaranty,
the lender shall remit a one-time insurance fee of two per cent on the
principal amount of the guaranteed portion of the loan, at the time the loan is
booked, except that for the following loans a reduced fee of one per cent shall
be paid:



(1)  Loans of $75,000 or less with a maturity
exceeding twelve months;



(2)  All guaranteed loans with a maturity of twelve
months or less.



This fee may be paid by the borrower as a cost for
the loan.



(g)  When any installment of principal and
interest has been due for sixty days and has not been paid by the borrower, the
department shall issue, on request of the lender, a check for the percentage of
the overdue payment guaranteed, thereby acquiring a division of interest in the
collateral pledged by the borrower in proportion to the amount of the payment. 
The department shall be reimbursed for any amounts so paid plus interest at the
applicable rate, where payment is collected from the borrower.



(h)  Under conditions specified in department
rules, the lender may request that a portion or all of the guaranteed
percentage of the principal balance of the loan be converted to a participating
share held by the department subject to section 155-6.



(i)  Should the lender deem that foreclosure
proceedings are necessary to collect moneys due from the borrower, it shall so
notify the department.  Within thirty days of the notification, the department
may elect to request an assignment of the loan on payment in full to the lender
of the principal balance and interest due.  Foreclosure proceedings shall be
held in abeyance in the interim.



(j)  The lender may reduce the percentage of
the principal balance guaranteed under this section at any time. [L 1999, c
148, §2; am L 2000, c 51, §6]