§ 138d.10. Review of application.
(a) The evaluation of the application by the Loan Committee will be based on the following criteria:
(1) Credit factors.
(i) The applicant. Character, experience, education, training, management of finance and farm operation, absence of prior criminal record, credit history and rating as determined from credit reporting services and other sources.
(ii) Financial responsibility. Financial responsibility reflecting the ability to meet obligations, continue farm operations and protect the lender and the Department against undue risk. The applicant’s total assets controlled, equity owned, contingent liabilities and history of earnings to date are significant measures of financial responsibility.
(iii) Repayment capacity. The determination of repayment capacity requires an analysis of cash flow history and projection. A cash flow project shall reflect cash generated from the applicant’s farm operation and from other sources. Generally, the flow of cash shall be sufficient to meet current obligations and provide a remainder for contingencies.
(iv) Collateral offered on available security. Collateral requirements are contingent upon the requirements of the law as dictated by the strengths or weaknesses of credit factors. The requirement of collateral and collateral taken shall reasonably protect the Department, provide the necessary control of equity and repayment and leave the applicant in a position to reasonably manage his farm operation. The applicant’s ability to give the Department a first position in terms of a lien on collateral or to share a first position with the lender providing matching funds, will be given great weight.
(2) Capital needs. The capital needs of the applicant in light of available funds.
(3) Tax obligations. The payment to date of tax obligations due and owing by the applicant to the Commonwealth or a political subdivision thereof.
(b) Loans will be awarded to applicants for projects demonstrating the greatest return on investment.
(c) In consideration of subsections (a) and (b), an equitable geographic distribution of loans throughout this Commonwealth.
Cross References This section cited in 7 Pa. Code § 138d.12 (relating to action by Secretary).
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