§155-9  Classes of loans; purposes, terms,eligibility.  (a)  Loans made under this chapter shall be for the purposesand in accordance with the terms specified in classes "A" through"H" in this section and shall be made only to applicants who meet theeligibility requirements specified therein and except as to class "B"loans to associations and class "E" loans, the eligibilityrequirements specified in section 155-10.  The maximum amount of a loan forclass "A", "C", "D", and "F" loans toan individual applicant shall also apply to any loan application submitted by apartnership, corporation, or other entity, and for the purpose of determiningwhether the maximum loan amount to any individual will be exceeded, outstandingloans to any partnership, corporation, or other entity that the individual hasa legal or equitable interest in excess of twenty per cent shall be taken intoaccount.

(b)  Class A:  Farm ownership and improvementloans shall provide for:

(1)  The purchase or improvement of farm land;

(2)  The purchase, construction, or improvement ofadequate farm dwellings, and other essential farm buildings; and

(3)  The liquidation of indebtedness incurred for anyof the foregoing purposes.

The loans shall be for an amount not to exceed$800,000 and for a term not to exceed forty years.  To be eligible, theapplicant shall (A) derive, or present an acceptable plan to derive, a majorportion of the applicant's income from and devote, or intend to devote, most ofthe applicant's time to farming operations; and (B) have or be able to obtainthe operating capital, including livestock and equipment, needed tosuccessfully operate the applicant's farm.

(c)  Class B:  Soil and water conservationloans shall provide for:

(1)  Soil conservation practices;

(2)  Water development, conservation, and use;

(3)  Drainage; and

(4)  The liquidation of indebtedness incurred for anyof the foregoing purposes.

The loans shall be for an amount not to exceed$35,000 to an individual or $200,000 to an association and shall be for a termnot to exceed twenty years for a loan to an individual and forty years to anassociation.  To be eligible, an individual applicant shall have sufficientfarm and other income to pay for farm operating and living expenses and to meetpayments on the applicant's existing debts, including the proposed soil andwater conservation loan.  An association, to be eligible, shall be a nonprofitorganization primarily engaged in extending services directly related to thepurposes of the loan to its members, and at least sixty per cent of itsmembership shall meet the eligibility requirements specified in section 155-10.

(d)  Class C:  Farm operating loans shall befor the purpose of carrying on and improving a farming operation, including:

(1)  The purchase of farm equipment and livestock;

(2)  The payment of production and marketing expenses,including materials, labor, and services;

(3)  The payment of living expenses;

(4)  The liquidation of indebtedness incurred for anyof the foregoing purposes; and

(5)  The exportation of crops and livestock.

The loans shall be for an amount not to exceed$800,000 and for a term not to exceed ten years.  To be eligible, an applicantshall derive, or present an acceptable plan to derive, a major portion of theapplicant's income from and devote, or intend to devote, most of theapplicant's time to farming operations.

Qualified farmers affected by state eradicationprograms may also be eligible for loans under this subsection.  Loans made forrehabilitation from eradication programs shall be subject to the terms of class"C" loans; provided that the interest rate shall be three per cent ayear and the requirements in section 155-3 shall be waived and paragraph (4)shall not apply.

(e)  Class D:  Emergency loans shall be for thepurpose of providing relief and rehabilitation to qualified farmers withoutlimit as to purpose:

(1)  In areas stricken by extraordinary rainstorms,windstorms, droughts, tidal waves, earthquakes, volcanic eruptions, and othernatural catastrophes;

(2)  On farms stricken by livestock disease epidemicsand crop blights;

(3)  On farms seriously affected by prolonged shippingand dock strikes;

(4)  During economic emergencies caused byoverproduction, excessive imports, and the like; and

(5)  During other emergencies as determined by theboard of agriculture.

The maximum amounts and period for the loansshall be determined by the board of agriculture; provided that the board shallrequire that any settlement or moneys received by qualified farmers as a resultof an emergency declared under this section shall first be applied to therepayment of an emergency loan made under this chapter.

(f)  Class E:  Loans to farmers' cooperatives,corporations, and food manufacturers shall provide credit to entities engagedin marketing, purchasing, and processing, and providing farm business services,including:

(1)  Facility loans to purchase or improve land,building, and equipment for an amount not to exceed $500,000 and a term not toexceed twenty years;

(2)  Operating loans to finance inventories ofsupplies and materials, warehousing, and shipping commodities, extension ofconsumer credit to justified farmer-members, and other normal operatingexpenses for an amount not to exceed $300,000 and a term not to exceed sevenyears; and

(3)  The exportation of crops and livestock.

To be eligible, a farmers' cooperative orcorporation shall have a majority of its board of directors and a majority ofits membership as shareholders who meet the eligibility requirements of section155-10 and who devote most of their time to farming operations, and thefacility loans shall be for an amount not to exceed $500,000 or eighty per centof the cost of the project, whichever is less.

To be eligible, a food manufacturer shall belicensed to do business in the State, and the controlling interest of theentity shall possess a minimum of two years of relevant processing ormanufacturing experience as acceptable to the department of agriculture.  Theentity shall process Hawaii-grown agricultural products or use Hawaii-grownagricultural products as an ingredient in the manufacturing process.  Facilityloans shall be for an amount not to exceed $500,000 or eighty per cent of thecost of the project, whichever is less.  The requirements in section 155-10shall be waived for food manufacturing loans; however, the entity shall be asound credit risk with the ability to repay the money borrowed.

(g)  Class F:  Loans for new farmer programsshall provide for costs of a new farm enterprise for qualified new farmers:

(1)  Initial loans made under this class shall be forpurposes and in accordance with the terms specified in class "A" and"C" only, and shall be made only for full-time farming.  The loansshall be made for an amount not to exceed $100,000 or eighty-five per cent ofthe cost of the project, whichever is less;

(2)  Any subsequent loan shall be made from classes"A" to "D", respectively, depending upon the purpose forwhich the loan funds are used; and

(3)  Borrowers shall comply with special term loanagreements as may be required by the department and shall take special trainingcourses as the department deems necessary.

(h)  Class G:  Loans to part-time farmers shallbe for farm improvement and operating purposes for carrying on and improvingfarming operations, including loans for:

(1)  The purchase, construction, and improvement offarm production and growing structures;

(2)  The purchase of farm equipment or livestock; and

(3)  The payment of production and marketing expenses,including materials, labor, and services.

The liquidation of indebtedness incurred forany of the purposes under this subsection and for living expenses shall not beauthorized purposes.  Each loan shall be for an amount not to exceed $25,000and for a term not to exceed ten years.

(i)  Class H:  Farm sustainable project loansshall provide for:

(1)  The purchase, construction, or improvement ofessential farm buildings, including the improvement of existing farm buildingsrelated to the project;

(2)  The improvement of land that may be required bythe project;

(3)  The purchase of equipment and payment of anyrelated expenses, including materials, labor, and services;

(4)  Operating expenses associated with the project;or

(5)  The liquidation of indebtedness incurred for anyof the foregoing purposes.

The loans shall be for an amount not to exceed$1,500,000 or eighty-five per cent of the project cost, whichever is less, andfor a term not to exceed forty years.

To be eligible, the applicant shall be aqualified farmer of sound credit rating with the ability to repay the moneyborrowed, as determined by the department.  Income from the applicant's farmingactivities and any supplemental income that may be generated from the projectshall be the sole criterion for the department's determination of theapplicant's ability to repay the money borrowed.  The department'sdetermination may be based on projections of income and expenses. [L 1959, c278, pt of §1; am L 1961, c 104, §1(k); Supp, §102-9; HRS §155-9; am L 1969, c49, §1; am L 1972, c 87, §3; am L 1979, c 222, §7; am L 1982, c 63, §3; gen ch1985; am L 1989, c 222, §4; am L 1990, c 230, §1; am L 1996, c 253, §1; am L1999, c 32, §4 and c 157, §2; am L 2000, c 51, §10; am L 2001, c 267, §2; am L2008, c 209, §4]