§ 4018. Farm Enterprise Loan Agreement and Guarantee Terms.

(a) The terms and conditions of a Loan Agreement to a Farm Enterprise shall include all of the following:

(1) The maximum interest rate shall be determined based upon the percentage of the Loan which is guaranteed by a Corporation, as follows:

(A) If the percentage guaranteed is 95 percent, the maximum Loan interest rate shall be Prime.

(B) If the percentage guaranteed is 90 percent , the maximum Loan interest rate shall be Prime plus one percent.

(C) If the percentage guaranteed is 85 percent, the maximum Loan interest rate shall be Prime plus two percent.

(D) If the percentage guaranteed is 80 percent, the maximum Loan interest rate shall be Prime plus three percent.

(2) The Lender shall be authorized to assess reasonable charges upon the Borrower based upon Lender's out of pocket expenses in connection with the Loan. An example would be the cost of a title report for a loan secured by real property. Lender is also authorized to charge a Loan fee of up to one and one-half percent (1.5%) of the Loan amount.

(b) The terms and conditions of a guarantee shall include:

(1) The maximum Guarantee amount per borrower per disaster shall be five hundred thousand dollars ($500,000) plus the interest owed on that amount.

(2) A requirement that the Lender has complied with any conditions contained in the resolution adopted by a Corporation's board of directors authorizing the Guarantee; provided, however, that this restriction only shall apply to the extent that the conditions in such resolution are expressly set forth in the Guarantee.

(3) A requirement that the Lender has not engaged, and will not engage, in fraudulent or grossly negligent practices in connection with the Borrower, Guarantee, the Loan or the Loan Agreement.

(4) A statement that neither the terms of the Guarantee nor the Loan shall be amended without the prior written approval of the Borrower, Lender and the Corporation executing the Guarantee.

(5) A requirement that the Lender make a good faith effort to send to the Corporation executing the Guarantee, a copy of all correspondence mailed to the Borrower.

(6) Inclusion of the section 4013 Demand Procedures.

(7) The term of the Guarantee shall not exceed seven years.

(8) Corporations shall be authorized to charge a Guarantee fee not to exceed one percent of the Guarantee amount for issuing a Farm Enterprise Guarantee.

HISTORY

1. New section filed 3-22-91 as an emergency; operative 3-22-91 (Register 91, No. 16). A Certificate of Compliance must be transmitted to OAL by 7-22-91 or emergency language will be repealed by operation of law on the following day.

2. New section refiled 4-9-91 including amendment of subsection (b)(7) as an emergency; operative 4-9-91 (Register 91, No. 25). A Certificate of Compliance must be transmitted to OAL by 8-7-91 or emergency language will be repealed by operation of law on the following day.

3. Editorial correction of printing error removing erroneous former HISTORY2. (Register 91, No. 25).

4. Repealer and new section filed 3-19-92 as an emergency; operative 3-19-92 (Register 92, No. 15). A Certificate of Compliance must be transmitted to OAL 7-17-92 or emergency language will be repealed by operation of law on the following day.

5. Renumbering of former section 4018 to section 4618 and new section 4018 filed 6-2-92; operative 6-2-92 (Register 92, No. 24).

6. Editorial correction of printing error in History4. (Register 92, No. 37).

7. Amendment of subsections (a)(2) and (b)(1) filed 6-15-95 as an emergency; operative 6-15-95 (Register 95, No. 24). A Certificate of Compliance must be transmitted to OAL by 12-12-95 or emergency language will be repealed by operation of law on the following day.

8. Amendment of subsection (b)(1) filed 6-24-96; operative 6-24-96 pursuant to Government Code section 11343.4(d) (Register 96, No. 26).

9. Amendment of subsections (a)(1)(A)-(C) and (b)(1)-(2) filed 12-27-2004 as a deemed emergency pursuant to Corporations Code section 14024; operative 12-27-2004 (Register 2004, No. 53). A Certificate of Compliance must be transmitted to OAL by 6-27-2005 or emergency language will be repealed by operation of law on the following day.

10. Editorial correction of History9 (Register 2005, No. 27).

11. Certificate of Compliance as to 12-27-2004 order transmitted to OAL 5-25-2005 and filed 7-7-2005 (Register 2005, No. 27).

Note

Note: Authority cited: Section 14075(b), Corporations Code. Reference: Section 14075(a), Corporations Code.