7 USC 1946 - Liability of borrower

View all text of Subchapter II [§ 1941 - § 1949]

§ 1946. Liability of borrower

(a) Determination of interest rates

(1) 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),1

1 See References in Text note below.

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) The interest rate on a microloan to a beginning farmer or rancher or veteran farmer or rancher (as defined in section 2279(e) 1 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

(1) In general

(2) Term

(3) Eligibility

(4) Termination of delinquent loansIf 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 commoditiesA 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) was eligible for a price support program of the Department of Agriculture on the day before April 4, 1996.

(Pub. L. 87–128, title III, § 316, Aug. 8, 1961, 75 Stat. 311; Pub. L. 90–488, § 10, Aug. 15, 1968, 82 Stat. 771; Pub. L. 95–334, title I, § 117, Aug. 4, 1978, 92 Stat. 426; Pub. L. 97–35, title I, § 160(b), Aug. 13, 1981, 95 Stat. 377; Pub. L. 98–258, title VI, § 604(b), Apr. 10, 1984, 98 Stat. 139; Pub. L. 101–624, title XVIII, § 1803(b), Nov. 28, 1990, 104 Stat. 3818; Pub. L. 104–127, title VI, §§ 614, 661(g), Apr. 4, 1996, 110 Stat. 1089, 1107; Pub. L. 113–79, title V, § 5106(b)(3), Feb. 7, 2014, 128 Stat. 838.)