§ 138d.7. General conditions.
(a) Interest rates. The interest rate will be established once a year by the Secretary.
(b) Term of loan and rate of payment. The maximum term of a loan may not exceed 7 years. Payments shall be made monthly, quarterly or semi-annually, as determined by the Loan Committee.
(c) Security.
(1) Policy. The Department will fully secure each loan before distributing the loan proceeds and its lien position may not be less than a second position as to liens on real estate and equipment connected with the farm operation. Only a lender providing matching funds under § 138d.6 (relating to evidence of matching funds) will be permitted to have a lien position superior to that of the Department. A loan shall be fully secured and no part of the loan shall be unsecured.
(2) Valuation of collateral. Real estate security shall be valued on the basis of appraised value and equipment security shall be valued on the basis of resale value.
(3) Additional security. The Department may require other and additional security as it deems just and reasonable, including personal liability, additional collateral, insurance and guarantees.
(d) Sale of real or personal property. If the applicant sells real or personal property connected with the farm operation which is subject to a lien in favor of the Department, the entire principal balance of the loan and interest incurred to date shall immediately become due and payable.
(e) Verification. Within 6 months after receiving the proceeds of the loan, the applicant shall submit to the Department written receipts for the total amount of the project costs. If receipts are not submitted within the 6-month period or a portion of loan proceeds are unaccounted for, the entire principal balance of the loan and interest incurred to date shall immediately become due and payable.
(f) Prepayments. To the extent the applicant prepays the loan made by the lender providing matching funds, the applicant shall repay the loan made by the Department.
(g) Building and zoning. Construction of a building shall conform to zoning and building codes.
(h) Loan agreement. The applicant shall sign a loan agreement setting forth the term and amount of the loan, a repayment schedule and other terms or conditions as the Department may require.
(i) Previous default. A loan will not be made under this chapter to an applicant who has previously defaulted on a loan made, guaranteed or insured by the Commonwealth, the Federal Government or by the government of another state to finance the purchase or improvement of a farm, a farm building or farm-related operation.
Cross References This section cited in 7 Pa. Code § 138d.12 (relating to action by Secretary).
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