
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: 7USC1964]

 
                          TITLE 7--AGRICULTURE
 
                     CHAPTER 50--AGRICULTURAL CREDIT
 
                     SUBCHAPTER III--EMERGENCY LOANS
 
Sec. 1964. Terms of loans


(a) Maximum amount of loan

    The Secretary may not make a loan under this subchapter to a 
borrower who has suffered a loss in an amount that--
        (1) exceeds the actual loss caused by a disaster; or
        (2) would cause the total indebtedness of the borrower under 
    this subchapter to exceed $500,000.

(b) Interest rates

    Loans under this subchapter shall be at rates of interest as 
follows:
        (1) For loans or portions of loans up to the amount of the 
    applicant's actual loss caused by the disaster, as limited under 
    subsection (a)(1) of this section, the interest shall be at rates 
    prescribed by the Secretary, but not in excess of 8 percent per 
    annum; and
        (2) For loans or portions of loans in excess of the amount of 
    the applicant's actual loss caused by the disaster, as limited under 
    subsection (a)(1) of this section, (A) the interest for insured 
    loans shall be at rates prevailing in the private market for similar 
    loans, as determined by the Secretary, and (B) the interest for 
    guaranteed loans shall be at rates agreed on by the borrower and 
    lender, but not in excess of such rates as may be determined by the 
    Secretary.

(c) Interest subsidies

    For guaranteed loans under this subchapter, the Secretary may pay 
interest subsidies to the lenders for those portions of the loans up to 
the amount of the actual loss caused by the disaster, as limited under 
subsection (a)(1) of this section. Any such subsidy shall not exceed the 
difference between the interest rate being charged for loans up to the 
amount of the actual loss, as established under subsection (b)(1) of 
this section, and the maximum interest rate for guaranteed loans, as 
established under subsection (b)(2) of this section.

(d) Repayment

                           (1) In general

        All loans under this subchapter shall be repayable at such times 
    as the Secretary may determine, taking into account the purposes of 
    the loan and the nature and effect of the disaster, but not later 
    than as provided for loans for similar purposes under subchapters I 
    and II of this chapter, and upon the full personal liability of the 
    borrower and upon the best security available, as the Secretary may 
    prescribe: Provided, That the security is adequate to assure 
    repayment of the loans, except that if such security is not 
    available because of the disaster, the Secretary shall (1) accept as 
    security such collateral as is available, a portion or all of which 
    may have depreciated in value due to the disaster and which in the 
    opinion of the Secretary, together with the Secretary's confidence 
    in the repayment ability of the applicant, is adequate security for 
    the loan, and (2) make such loan repayable at such times as the 
    Secretary may determine, not later than as provided under 
    subchapters I and II of this chapter, as justified by the needs of 
    the applicant: Provided further, That for any disaster occurring 
    after January 1, 1975, the Secretary, if the loan is for a purpose 
    described in subchapter II of the chapter, may make the loan 
    repayable at the end of a period of more than seven years, but not 
    more than twenty years, if the Secretary determines that the need of 
    the loan applicant justifies such a longer repayment period: 
    Provided further, That for any direct or insured loan (other than a 
    guaranteed loan) approved under section 1961(b) of this title, three 
    years after the loan is made or insured, and every two years 
    thereafter for the term of the loan, the Secretary shall review the 
    loan; and if, based on such review, the Secretary determines that 
    the borrower is able to obtain a loan from non-Federal sources at 
    reasonable rates and terms for loans for similar purposes and 
    periods of time, the borrower shall on request by the Secretary, 
    apply for and accept such non-Federal loan in sufficient amount to 
    repay the Secretary. If farm assets (including land, livestock, and 
    equipment) are used as collateral to secure a loan made under this 
    subchapter, the Secretary shall establish the value of the assets as 
    of the day before the occurrence of the natural disaster, major 
    disaster, or emergency that is the basis for a request for 
    assistance under this subchapter or the Robert T. Stafford Disaster 
    Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.).

                   (2) No basis for denial of loan

        (A) In general

            Subject to subparagraph (B), the Secretary shall not deny a 
        loan under this subchapter to a borrower by reason of the fact 
        that the borrower lacks a particular amount of collateral for 
        the loan if the Secretary is reasonably certain that the 
        borrower will be able to repay the loan.

        (B) Refusal to pledge available collateral

            The Secretary may deny or cancel a loan under this 
        subchapter if a borrower refuses to pledge available collateral 
        on request by the Secretary.

(e) Grant eligibility

    Any political subdivision of a State with a population of less than 
ten thousand inhabitants that, if such subdivision had a population of 
ten thousand or more inhabitants, would be eligible for a grant under 
the first title of the Community Emergency Drought Relief Act of 1977 
shall be eligible for a grant under this chapter during any period in 
which the Community Emergency Drought Relief Act of 1977 is or has been 
in effect.

(Pub. L. 87-128, title III, Sec. 324, Aug. 8, 1961, 75 Stat. 311; Pub. 
L. 93-24, Sec. 4, Apr. 20, 1973, 87 Stat. 25; Pub. L. 94-68, Sec. 5, 
Aug. 5, 1975, 89 Stat. 381; Pub. L. 95-89, title IV, Sec. 406, Aug. 4, 
1977, 91 Stat. 561; Pub. L. 95-334, title I, Sec. 119, Aug. 4, 1978, 92 
Stat. 427; Pub. L. 96-302, title I, Sec. 120(b), July 2, 1980, 94 Stat. 
841; Pub. L. 96-438, Sec. 3(a), (b)(1), Oct. 13, 1980, 94 Stat. 1872, 
1873; Pub. L. 97-35, title I, Sec. 162(a), Aug. 13, 1981, 95 Stat. 378; 
Pub. L. 98-258, title VI, Sec. 602(b), Apr. 10, 1984, 98 Stat. 138; Pub. 
L. 99-198, title XIII, Sec. 1308(b)(3), (c), Dec. 23, 1985, 99 Stat. 
1523; Pub. L. 100-707, title I, Sec. 109(c)(2), Nov. 23, 1988, 102 Stat. 
4708; Pub. L. 104-127, title VI, Secs. 624, 625, Apr. 4, 1996, 110 Stat. 
1091; Pub. L. 105-277, div. A, Sec. 101(a) [title VIII, Sec. 802], Oct. 
21, 1998, 112 Stat. 2681, 2681-38.)

                       References in Text

    For definition of ``this chapter'', referred to in subsecs. (d) and 
(e), see note set out under section 1921 of this title.
    The Robert T. Stafford Disaster Relief and Emergency Assistance Act, 
referred to in subsec. (d), is Pub. L. 93-288, May 22, 1974, 88 Stat. 
143, as amended, which is classified principally to chapter 68 
(Sec. 5121 et seq.) of Title 42, The Public Health and Welfare. For 
complete classification of this Act to the Code, see Short Title note 
set out under section 5121 of Title 42 and Tables.
    The Community Emergency Drought Relief Act of 1977, referred to in 
subsec. (e), is Pub. L. 95-31, May 23, 1977, 91 Stat. 169. Title I of 
the Community Emergency Drought Relief Act of 1977 is set out as a note 
under section 5184 of Title 42. For complete classification of this Act 
to the Code, see Tables.


                               Amendments

    1998--Subsec. (d). Pub. L. 105-277 inserted heading, designated 
existing provisions as par. (1) and inserted heading, and added par. 
(2).
    1996--Pub. L. 104-127, Sec. 624, inserted section catchline.
    Subsec. (a). Pub. L. 104-127, Sec. 624, added subsec. (a) and struck 
out former subsec. (a) which read as follows: ``No loan made or insured 
under this subchapter may exceed the amount of the actual loss caused by 
the disaster or $500,000, whichever is less, for each disaster.''
    Subsec. (d). Pub. L. 104-127, Sec. 625, in last sentence, 
substituted ``establish the value of the assets as of the day before the 
occurrence of the natural disaster, major disaster, or emergency that is 
the basis for a request for assistance under this subchapter or the 
Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 
U.S.C. 5121 et seq.).'' for ``value the assets based on the higher of 
(A) the value of the assets on the day before the date the governor of 
the State in which the farm is located requests assistance under this 
subchapter or the Disaster Relief and Emergency Assistance Act for any 
portion of such State affected by the disaster with respect to which the 
application for the loan is made, or (B) the value of the assets one 
year before such day.''
    1988--Subsec. (d). Pub. L. 100-707 substituted ``and Emergency 
Assistance Act'' for ``Act of 1974''.
    1985--Subsec. (a). Pub. L. 99-198, Sec. 1308(c), in amending subsec. 
(a) generally, struck out par. (1) designation, substituted ``No loan'' 
for ``Except as otherwise provided in paragraph (2) of this subsection, 
no loan'', and struck out par. (2) authorization of loans through Sept. 
30, 1982 for applicants unable to obtain sufficient credit elsewhere, 
limited to an amount that would not cause the total unpaid principal 
indebtedness of the loan applicant to exceed: $1,500,000 through end of 
fiscal year 1980; $1,000,000 during fiscal year 1981; and $500,000 
during fiscal year 1982; and restricted loans in excess of amount of 
actual loss that were for more than $300,000 without a prior 
determination of the Secretary of applicant's inability to obtain loans 
to finance actual needs at reasonable rates and terms in the residential 
community of the applicant for loans for similar purposes and periods of 
time.
    Subsec. (b)(1). Pub. L. 99-198, Sec. 1308(b)(3), substituted 
provision for interest rates prescribed by the Secretary but ``not in 
excess of 8 percent per annum'' for former such provision but ``(A) if 
the applicant is not able to obtain sufficient credit elsewhere, not in 
excess of 8 per centum per annum, and (B) if the applicant is able to 
obtain sufficient credit elsewhere, not in excess of the rate prevailing 
in the private market for similar loans, as determined by the 
Secretary''.
    1984--Subsec. (d). Pub. L. 98-258 inserted provision that, if farm 
assets (including land, livestock, and equipment) are used as collateral 
to secure a loan made under this subchapter, the Secretary shall value 
the assets based on the higher of (A) the value of the assets on the day 
before the date the governor of the State in which the farm is located 
requests assistance under this subchapter or the Disaster Relief Act of 
1974 for any portion of such State affected by the disaster with respect 
to which the application for the loan is made, or (B) the value of the 
assets one year before such day.
    1981--Subsec. (b)(1). Pub. L. 97-35 in cl. (A) increased amount from 
5 to 8 per centum, and in cl. (B) substituted provisions relating to a 
rate not in excess of the rate prevailing in the private market for 
similar loans, for provisions relating to a rate not in excess of 
current average market yield on outstanding United States marketable 
obligations, plus additional charges and adjustments.
    1980--Subsec. (a). Pub. L. 96-348, Sec. 3(a), (b)(1), repealed 
section 120 of Pub. L. 96-302 (see par. below) and amended subsec. (a) 
generally, substituting provisions relating to the limitation on loans 
made or insured under this subchapter and authorizing excess loan 
amounts for provisions relating to the interest rates, maturity and 
security of loans made or insured under this chapter.
    Pub. L. 96-302, Sec. 120(b) (see par. above), substituted interest 
rate provisions of first sentence for prior provision for loans ``(1) at 
a rate of interest not in excess of 5 per centum per annum on loans up 
to the amount of the actual loss caused by the disaster, and (2) for any 
loans or portions of loans in excess of that amount, the interest rate 
will be that prevailing in the private market for similar loans, as 
determined by the Secretary'' and inserted proviso in second sentence 
for repayment of subsec. (a)(1)(B) loans.
    Subsec. (b). Pub. L. 96-438, Sec. 3(b)(1), substituted provisions 
relating to interest rates on loans made or insured under this 
subchapter for provisions relating to eligibility of political 
subdivisions of states for grants under this chapter.
    Subsecs. (c) to (e). Pub. L. 96-438, Sec. 3(b)(1), added subsecs. 
(c) to (e).
    1978--Subsecs. (b), (c). Pub. L. 95-334 redesignated subsec. (c) as 
(b). Former subsec. (b), which related to reductions in the interest 
rate based on interest rate of the Small Business Administration, was 
struck out.
    1977--Subsec. (a). Pub. L. 95-89 designated existing provisions as 
subsec. (a) and struck out last proviso prescribing for any loan made by 
the Small Business Administration in connection with a disaster 
occurring on or after Aug. 5, 1975, under section 636(b)(1), (2), or (4) 
of title 15 a rate of interest determined in the first paragraph 
following section 636(b)(8) of title 15 for loans under paragraphs (3), 
(5), (6), (7), or (8) of section 636(b) of title 15, now covered in 
subsec. (b) of this section.
    Subsecs. (b), (c). Pub. L. 95-89 added subsecs. (b) and (c).
    1975--Pub. L. 94-68 made the existing rate of 5 percent applicable 
to loans up to the amount of the actual loss caused by the disaster, 
inserted provisions that for loans or portions of loans in excess of 
that amount the interest rate will be that prevailing in the private 
market for similar loans, as determined by the Secretary, and inserted 
provisos relating to security, disasters occurring after Jan. 1, 1975, 
and loans made by Small Business Administration.
    1973--Pub. L. 93-24 substituted ``5'' for ``3'' per centum.


                    Effective Date of 1996 Amendment

    Amendment by section 624 of Pub. L. 104-127 effective Apr. 4, 1996, 
and amendment by section 625 of Pub. L. 104-127 effective 90 days after 
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 1984 Amendment

    Amendment by Pub. L. 98-258 applicable to disasters occurring after 
May 30, 1983, see section 602(c) of Pub. L. 98-258, set out as a note 
under section 1961 of this title.


                    Effective Date of 1981 Amendment

    Section 162(b) of Pub. L. 97-35 provided that: ``The amendments made 
by this section [amending this section] shall  apply  to  loans  made  
with  respect  to  disasters occurring after September 30, 1981''.


                    Effective Date of 1980 Amendments

    Amendment by section 3(b)(1) of Pub. L. 96-438 effective with 
respect to loans approved after Oct. 13, 1980, except for certain 
subsequent emergency loans, see section 3(d) of Pub. L. 96-438, set out 
as a note under section 1961 of this title.
    Amendment by Pub. L. 96-302 effective Oct. 1, 1980, see section 507 
of Pub. L. 96-302, set out as a note under section 631 of Title 15, 
Commerce and Trade.


                    Effective Date of 1978 Amendment

    Section 119 of Pub. L. 95-334 provided that the amendment made by 
that section is effective Oct. 1, 1978.


   Small Business Disaster Loans; Interest Rate; Cancellation of Loans

    Loans by Small Business Administration in connection with any 
disaster occurring on or after Apr. 20, 1973 made under section 
636(b)(1), (2), or (4) of Title 15, as subject to interest rate 
determined under this section and prohibition against cancellation of 
such loan under any provision of law, see section 9 of Pub. L. 93-24, 
set out as a note under section 636 of Title 15, Commerce and Trade.

                  Section Referred to in Other Sections

    This section is referred to in sections 1961, 1963 of this title.
