[Code of Federal Regulations]

[Title 7, Volume 7]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 7CFR762.110]



[Page 136-137]

 

                          TITLE 7--AGRICULTURE

 

       CHAPTER VII--FARM SERVICE AGENCY, DEPARTMENT OF AGRICULTURE

 

PART 762_GUARANTEED FARM LOANS--Table of Contents

 

Sec. 762.110  Loan application.



    (a) Loans for $125,000 or less. All lenders except PLP lenders will 

submit the following items:

    (1) A complete application for loans of $125,000 or less must, at 

least, consist of:

    (i) The application form;

    (ii) Loan narrative;

    (iii) Balance sheet;

    (iv) Cash flow budget;

    (v) Credit report;

    (vi) A plan for servicing the loan.

    (2) In addition to the minimum requirements, the lender will perform 

at least the same level of evaluation and documentation for a guaranteed 

loan that the lender typically performs for non-guaranteed loans of a 

similar type and amount.

    (3) The $125,000 threshold includes any single loan, or package of 

loans submitted for consideration at any one time. A lender must not 

split a loan into two or more parts to meet the threshold thereby 

avoiding additional documentation.

    (4) The Agency may require lenders with a lender loss rate in excess 

of the



[[Page 137]]



rate for CLP lenders to assemble additional documentation from paragraph 

(b) of this section.

    (b) Loans over $125,000. A complete application for loans over 

$50,000 will consist of the items required in paragraph (a) of this 

section plus the following:

    (1) Verification of income;

    (2) Verification of debts over $1,000;

    (3) Three years financial history;

    (4) Three years of production history (for standard eligible lenders 

only);

    (5) Proposed loan agreements; and,

    (6) If construction or development is planned, a copy of the plans, 

specifications, and development schedule.

    (c) Applications from PLP lenders. Notwithstanding paragraphs (a) 

and (b) of this section, a complete application for PLP lenders will 

consist of at least:

    (1) An application form;

    (2) A loan narrative; and

    (3) Any other items agreed to during the approval of the PLP 

lender's status and contained in the PLP lender agreement.

    (d) Submitting applications. (1) All lenders must compile and 

maintain in their files a complete application for each guaranteed loan. 

See paragraphs (a), (b), and (c) of this section.

    (2) The Agency will notify CLP lenders which items to submit to the 

Agency.

    (3) PLP lenders will submit applications in accordance with their 

agreement with the Agency for PLP status.

    (4) CLP and PLP lenders must certify that the required items, not 

submitted, are in their files.

    (5) The Agency may request additional information from any lender or 

review the lender's loan file as needed to make eligibility and approval 

decisions.

    (e) Incomplete applications. If the lender does not provide the 

information needed to complete its application by the deadline 

established in an Agency request for the information, the application 

will be considered withdrawn by the lender.

    (f) Conflict of interest. (1) When a lender submits the application 

for a guaranteed loan, the lender will inform the Agency in writing of 

any relationship which may cause an actual or potential conflict of 

interest.

    (2) Relationships include:

    (i) The lender or its officers, directors, principal stockholders 

(except stockholders in a Farm Credit System institution that have stock 

requirements to obtain a loan), or other principal owners having a 

financial interest (other than lending relationships in the normal 

course of business) in the loan applicant or borrower.

    (ii) The loan applicant or borrower, a relative of the loan 

applicant or borrower, anyone residing in the household of the loan 

applicant or borrower, any officer, director, stockholder or other owner 

of the loan applicant or borrower holds any stock or other evidence of 

ownership in the lender.

    (iii) The loan applicant or borrower, a relative of the loan 

applicant or borrower, or anyone residing in the household of the loan 

applicant or borrower is an Agency employee.

    (iv) The officers, directors, principal stockholders (except 

stockholders in a Farm Credit System institution that have stock 

requirements to obtain a loan), or other principal owners of the lender 

have substantial business dealings (other than in the normal course of 

business) with the loan applicant or borrower.

    (v) The lender or its officers, directors, principal stockholders, 

or other principal owners have substantial business dealings with an 

Agency employee.

    (3) The lender must furnish additional information to the Agency 

upon request.

    (4) The Agency will not approve the application until the lender 

develops acceptable safeguards to control any actual or potential 

conflicts of interest.



[64 FR 7378, Feb. 12, 1999, as amended at 68 FR 7695, Feb. 18, 2003]