
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 7USC1941]

 
                          TITLE 7--AGRICULTURE
 
                     CHAPTER 50--AGRICULTURAL CREDIT
 
                     SUBCHAPTER II--OPERATING LOANS
 
Sec. 1941. Persons eligible for loans


(a) Requirements

    The Secretary is authorized to make and insure loans under this 
subchapter to farmers and ranchers in the United States, and to farm 
cooperatives and private domestic corporations, partnerships, and joint 
operations that are controlled by farmers and ranchers and engaged 
primarily and directly in farming or ranching in the United States, 
subject to the conditions specified in this section. To be eligible for 
such loans, applicants who are individuals, or, in the case of 
cooperatives, corporations, partnerships, and joint operations, 
individuals holding a majority interest in such entity, must (1) be 
citizens of the United States, (2) for direct loans only, have either 
training or farming experience that the Secretary determines is 
sufficient to assure reasonable prospects of success in the proposed 
farming operations, (3) be or will become operators of not larger than 
family farms (or in the case of cooperatives, corporations, 
partnerships, and joint operations in which a majority interest is held 
by individuals who are related by blood or marriage, as defined by the 
Secretary, such individuals must be or will become either owners or 
operators of not larger than a family farm and at least one such 
individual must be or will become an operator of not larger than a 
family farm or, in the case of holders of the entire interest who are 
related by blood or marriage and all of whom are or will become farm 
operators, the ownership interest of each such holder separately 
constitutes not larger than a family farm, even if their interests 
collectively constitute larger than a family farm, as defined by the 
Secretary), and (4) be unable to obtain sufficient credit elsewhere to 
finance their actual needs at reasonable rates and terms, taking into 
consideration prevailing private and cooperative rates and terms in the 
community in or near which the applicant resides for loans for similar 
purposes and periods of time. In addition to the foregoing requirements 
of this subsection, in the case of corporations, partnerships, and joint 
operations, the family farm requirement of clause (3) of the preceding 
sentence shall apply as well to the farm or farms in which the entity 
has an operator interest and the requirement of clause (4) of the 
preceding sentence shall apply as well to the entity in the case of 
cooperatives, corporations, partnerships, and joint operations.

(b) Rural youths in 4-H Clubs, Future Farmers of America, etc.

    (1) Loans may also be made under this subchapter without regard to 
the requirements of clauses (2) and (3) of subsection (a) of this 
section to youths who are rural residents to enable them to operate 
enterprises in connection with their participation in 4-H Clubs, Future 
Farmers of America, and similar organizations.
    (2) A person receiving a loan under this subsection who executes a 
promissory note therefor shall thereby incur full personal liability for 
the indebtedness evidenced by such note in accordance with its terms 
free of any disability of minority.
    (3) For loans under this subsection the Secretary may accept the 
personal liability of a cosigner of the promissory note in addition to 
the borrowers' personal liability.
    (4) Youth enterprises not farming or ranching.--The operation of an 
enterprise by a youth under this subsection shall not be considered the 
operation of a farm or ranch under this chapter.

(c) Direct loans

                           (1) In general

        Subject to paragraph (3), the Secretary may make a direct loan 
    under this subchapter only to a farmer or rancher who--
            (A) is a qualified beginning farmer or rancher who has not 
        operated a farm or ranch, or who has operated a farm or ranch 
        for not more than 5 years;
            (B) has not received a previous direct operating loan made 
        under this subchapter; or
            (C) has received a previous direct operating loan made under 
        this subchapter during 6 or fewer years.

                           (2) Youth loans

        In this subsection, the term ``direct operating loan'' shall not 
    include a loan made to a youth under subsection (b) of this section.

                         (3) Transition rule

        If, as of April 4, 1996, a farmer or rancher has received a 
    direct operating loan under this subchapter during each of 4 or more 
    previous years, the borrower shall be eligible to receive a direct 
    operating loan under this subchapter during 3 additional years after 
    April 4, 1996.

(Pub. L. 87-128, title III, Sec. 311, Aug. 8, 1961, 75 Stat. 310; Pub. 
L. 92-419, title I, Sec. 120(a), Aug. 30, 1972, 86 Stat. 665; Pub. L. 
95-334, title I, Sec. 114, Aug. 4, 1978, 92 Stat. 425; Pub. L. 97-98, 
title XVI, Sec. 1601(b), Dec. 22, 1981, 95 Stat. 1346; Pub. L. 99-198, 
title XIII, Secs. 1301(a), 1302(b), 1303, Dec. 23, 1985, 99 Stat. 1518, 
1519; Pub. L. 104-127, title VI, Secs. 611, 661(f), Apr. 4, 1996, 110 
Stat. 1087, 1107; Pub. L. 105-277, div. A, Sec. 101(a) [title VIII, 
Sec. 805(2)], Oct. 21, 1998, 112 Stat. 2681, 2681-39.)

                       References in Text

    For definition of ``this chapter'', referred to in subsec. (b)(4), 
see note set out under section 1921 of this title.


                               Amendments

    1998--Subsec. (a). Pub. L. 105-277 inserted ``for direct loans 
only,'' before ``have either'' in cl. (2).
    1996--Subsec. (b)(1). Pub. L. 104-127, Sec. 661(f), struck out ``and 
for the purposes specified in section 1942 of this title'' before period 
at end.
    Subsec. (b)(4). Pub. L. 104-127, Sec. 611(b), added par. (4).
    Subsec. (c). Pub. L. 104-127, Sec. 611(a), added subsec. (c) and 
struck out former subsec. (c) which read as follows: ``The Secretary may 
not restrict eligibility for loans made or insured under this subchapter 
for purposes set forth in section 1942 of this title solely to borrowers 
of loans that are outstanding on December 23, 1985.''
    1985--Subsec. (a). Pub. L. 99-198, Sec. 1301(a), substituted--
        (1) ``, partnerships, and joint operations'' for ``and 
    partnerships'' wherever appearing after ``corporations'';
        (2) ``, partnerships, and joint operations'' for ``, and 
    partnerships'' wherever appearing after ``corporations''; and
        (3) ``individuals'' for ``members, stockholders, or partners, as 
    applicable,'' wherever appearing.
    Pub. L. 99-198, Sec. 1303, in cl. (3) parenthetical, inserted 
provision treating blood or marriage related owner-operators of the 
entire farm interest as separate interest holders of not larger than 
family farms though collective ownership constitutes a larger than a 
family farm.
    Subsec. (c). Pub. L. 99-198, Sec. 1302(b), added subsec. (c).
    1981--Subsec. (a). Pub. L. 97-98 substituted ``corporations and 
partnerships, the family farm'' for ``cooperatives, corporations, and 
partnerships, the family farm'' and ``as well to the entity in the case 
of cooperatives, corporations, and partnerships'' for ``as well to the 
entity''.
    1978--Pub. L. 95-334 substituted provisions setting forth 
eligibility criteria for loans to farmers and ranchers in the United 
States, and to farm cooperatives and private domestic corporations and 
partnerships controlled by farmers and ranchers and engaged primarily 
and directly in farming or ranching in the United States, for provisions 
setting forth eligibility criteria for loans to farmers and ranchers in 
the United States, Puerto Rico, and the Virgin Islands.
    1972--Pub. L. 92-419 designated existing provisions as subsec. (a) 
and added subsec. (b).


                    Effective Date of 1996 Amendment

    Amendment by section 611 of Pub. L. 104-127 effective 90 days after 
Apr. 4, 1996, and amendment by section 661(f) of Pub. L. 104-127 
effective Apr. 4, 1996, see section 663(a), (b) of Pub. L. 104-127, set 
out as a note under section 1922 of this title.


                    Effective Date of 1981 Amendment

    Amendment by Pub. L. 97-98 effective Dec. 22, 1981, see section 1801 
of Pub. L. 97-98, set out as an Effective Date note under section 4301 
of this title.


                     Farm Operating Loan Eligibility

    Pub. L. 106-224, title II, Sec. 255, June 20, 2000, 114 Stat. 424, 
provided that: ``During the period beginning on the date of the 
enactment of this Act [June 20, 2000] and ending on December 31, 2002--
        ``(1) sections 311(c) and 319 of the Consolidated Farm and Rural 
    Development Act (7 U.S.C. 1941(c), 1949) shall have no force or 
    effect; and
        ``(2) in making direct loans under subtitle B of that Act (7 
    U.S.C. 1941 et seq.), the Secretary shall give priority to a 
    qualified beginning farmer or rancher who has not operated a farm or 
    ranch, or who has operated a farm or ranch for not more than 5 
    years.''


        Authority of Secretary To Make or Guarantee Certain Loans

    Pub. L. 104-134, title II, Sec. 2002, Apr. 26, 1996, 110 Stat. 1321-
313, provided that: ``Notwithstanding any other provision of law, the 
Secretary of Agriculture is hereby authorized to make or guarantee an 
operating loan under Subtitle B [7 U.S.C. 1941 et seq.] or an emergency 
loan under Subtitle C [7 U.S.C. 1961 et seq.] of the Consolidated Farm 
and Rural Development Act (7 U.S.C. 1922 et. seq.), as in effect prior 
to April 4, 1996, to a loan applicant who was less than 90 days 
delinquent on April 4, 1996, if the loan applicant had submitted an 
application for the loan prior to April 5, 1996.''


                        1989 Farm Operating Loans

    Pub. L. 101-82, title III, Sec. 302, Aug. 14, 1989, 103 Stat. 582, 
provided that:
    ``(a) Direct Credit.--To the maximum extent practicable, the 
Secretary of Agriculture shall ensure that direct operating loans made 
or insured under subtitle B of the Consolidated Farm and Rural 
Development Act (7 U.S.C. 1941 et seq.) for 1990 crop production are 
made available to farmers and ranchers suffering major losses due to 
excess moisture, freeze, storm, or related condition occurring in 1989 
or drought or related condition occurring in 1988 or 1989, as authorized 
under existing law and under regulations of the Secretary that implement 
the objective of enabling farmers and ranchers to stay in business.
    ``(b) Loan Guarantees.--
        ``(1) In general.--Notwithstanding any other provision of law, 
    the Secretary shall make available in fiscal year 1990 guarantees to 
    commercial or cooperative lenders for loans under subtitle B of the 
    Consolidated Farm and Rural Development Act [7 U.S.C. 1941 et seq.], 
    to refinance and reamortize 1989 operating loans, or 1989 or 1990 
    installments due and payable on real estate debt, farm equipment or 
    building (including storage facilities) debt, livestock loans, or 
    other operating debt, of farmers and ranchers that otherwise cannot 
    be repaid due to major losses incurred by such farmers or ranchers 
    as a result of excess moisture, freeze, storm, or related condition 
    occurring in 1989 or drought or related condition occurring in 1988 
    or 1989.
        ``(2) Reamortization.--Each fiscal year 1990 guaranteed loan for 
    1988 or 1989 natural disaster purposes, as described in paragraph 
    (1), shall contain terms and conditions governing the reamortization 
    of the debt of the farmer or rancher that will provide the farmer or 
    rancher a reasonable opportunity to continue to receive new 
    operating credit while repaying the guaranteed loan, as determined 
    by the Secretary.
        ``(3) Eligibility.--Notwithstanding any other provision of law, 
    any person eligible to receive payments under subtitle A of title I 
    [7 U.S.C. 1421 note] shall be deemed eligible to have guaranteed, in 
    accordance with this subsection, loans made to such person by a 
    commercial or cooperative lender to refinance installment payments 
    that are or become due and payable during 1989 or 1990, as described 
    in paragraph (1), except that, to be deemed eligible to have such 
    loan guaranteed, the person must otherwise--
            ``(A) be current in the person's obligation to the 
        commercial or cooperative lender that agrees to accept the 
        guarantee in consideration of allowing the person to make the 
        1989 or 1990 payment or installment over a period of time not to 
        exceed 6 years from the original due date of such payment or 
        installment; and
            ``(B) meet the criteria for guaranteed loan borrowers under 
        subtitle B of the Consolidated Farm and Rural Development Act 
        established by the Secretary.
    ``(c) Use of Agricultural Credit Insurance Fund.--For purposes of 
providing guaranteed loans in accordance with subsection (b), in 
addition to funds otherwise available, the Secretary may use any funds 
available from the Agricultural Credit Insurance Fund during fiscal 
years [sic] 1989 or 1990 for emergency insured and guaranteed loans 
under subtitle C of the Consolidated Farm and Rural Development Act (7 
U.S.C. 1961 et seq.) to meet the needs resulting from natural disasters, 
except that funds available from such Fund first shall be used to 
satisfy the level of assistance estimated by the Secretary to meet the 
needs of persons eligible for emergency disaster loans.''
    Similar provisions were contained in the following prior act:
    Pub. L. 100-387, title III, Sec. 312, Aug. 11, 1988, 102 Stat. 948.

                  Section Referred to in Other Sections

    This section is referred to in sections 1922, 1994, 2006a of this 
title.
