[Code of Federal Regulations]
[Title 7, Volume 7, Parts 700 to 899]
[Revised as of January 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR773.19]

[Page 449-450]
 
                          TITLE 7--AGRICULTURE
 
                            CHAPTER VII--FARM
                SERVICE AGENCY, DEPARTMENT OF AGRICULTURE
 
PART 773--SPECIAL APPLE LOAN PROGRAM--Table of Contents
 
Sec. 773.19  Interest rate, terms, security requirements, and repayment.

    (a) Interest rate. The interest rate will be fixed for the term of 
the loan. The rate will be established by the Agency and available in 
each Agency Office, based upon the cost of Government borrowing for 
loans of similar maturities.
    (b) Terms. The loan term will be for up to 3 years, based upon the 
useful life of the security offered.
    (c) Security requirements. The Agency will take a lien on the 
following security, if available, as necessary to adequately secure the 
loan:
    (1) Real estate;
    (2) Chattels;
    (3) Crops;
    (4) Other assets owned by the applicant; and
    (5) Assets owned and pledged by a third party.
    (d) Documentation of security value.
    (1) For loans that are for $30,000 or less, collateral value will be 
based on the best available, verifiable information.
    (2) For loans of greater than $30,000 where the applicant's balance 
sheet shows a net worth of three times the loan amount or greater, 
collateral value will be based on tax assessment of real estate and 
depreciation schedules of chattels, as applicable, less any existing 
liens.
    (3) For loans of greater than $30,000 where the applicant's balance 
sheet shows a net worth of less than three times the loan amount, 
collateral value will be based on an appraisal. Such appraisals must be 
obtained by the applicant, at the applicant's expense and acceptable to 
the Agency. Appraisals of real estate must be completed in accordance 
with USPAP.
    (e) Repayment. (1) All loan applicants must demonstrate that the 
loan can be repaid.
    (2) For loans that are for $30,000 or less where the applicant's 
balance sheet shows a net worth of three times the loan amount or 
greater, repayment ability will be considered adequate without further 
documentation.
    (3) For loans that are for $30,000 or less where the applicant's 
balance sheet shows a net worth of less than

[[Page 450]]

three times the loan amount, repayment ability must be demonstrated 
using the farm's operating plan, including a projected cash flow budget 
based on historical performance. Such operating plan is required 
notwithstanding Sec. 773.18 of this part.
    (4) For loans that are for more than $30,000, repayment ability must 
be demonstrated using the farm's operating plan, including a projected 
cash flow budget based on historical performance.
    (f) Creditworthiness. All loan applicants must have an acceptable 
credit history demonstrated by debt repayment. A history of failure to 
repay past debts as they came due (including debts to the Internal 
Revenue Service) when the ability to repay was within their control will 
demonstrate unacceptable credit history. Unacceptable credit history 
will not include isolated instances of late payments which do not 
represent a pattern and were clearly beyond the applicant's control or 
lack of credit history.