3 AAC 80.055 - Lending practices
(a) If the balance of the commercial fishing
revolving loan fund is not adequate to meet the anticipated loan demand for the
remainder of the fiscal year, the department will process loan applications in
the following order according to the purpose of the loan:
(1) first, the purchase of limited entry
permits;
(2) second, satisfaction
of federal tax obligations;
(3)
third, vessel upgrade or purchase;
(4) fourth, the purchase of gear;
(5) fifth, the purchase of fishing quota
shares;
(6) sixth, refinancing as
permitted under
AS
16.10.310(a)(11).
(b) An applicant will be
considered eligible for a loan to purchase a limited entry permit, vessel, or
gear under
AS
16.10.310(a)(1)(B) or
purchase quota shares under
AS
16.10.310(a)(1)(C) if the
department determines that the applicant is not eligible for an alternative
source of financing. An applicant's ability to provide a guarantor for a loan
does not make the applicant ineligible for a loan under
AS
16.10.310(a)(1)(B) or
(a)(1)(C).
(c) A loan will not be approved if its
primary purpose would be to
(1) speculate in
the acquisition and sale of limited entry permits, quota shares, vessels, or
gear;
(2) lease out a limited entry
permit; or
(3) purchase a
commercial fishing vessel, gear, a limited entry permit, or quota shares that
will not be put to use in the fishing season immediately following the loan
approval date.
(d)
Except as provided in
AS
16.10.310(a)(10) and (11), a
loan will not be approved for refinancing long-term debt. Interim or
construction financing is not considered long-term debt if the term is 24
months or less and the promissory note or the original agreement was executed
less than 12 months before receipt of the application by the department, except
that the department may waive these restrictions if
(1) the applicant shows that the application
of these restrictions would result in undue hardship for the
applicant;
(2) the applicant is a
good financial risk; and
(3) the
state's investment is preserved.
(e) In determining the maximum loan amount
that may be approved for the purchase of a limited entry permit, the department
will rely on the value established by the Alaska Commercial Fisheries Entry
Commission or other appropriate sources as determined by the
department.
(f) Repealed
7/30/2000.
(g) Repealed
7/30/2000.
(h) A loan for the
purchase of a vessel for use in a limited entry fishery will not be approved
unless the applicant has access to a limited entry permit for that fishery and
the primary use of the vessel will be commercial fishing by the
borrower.
(i) A vessel that is
being purchased under this chapter cannot be leased unless the vessel is
primarily used by the borrower for commercial fishing. All lease agreements
must have prior approval by the department.
(j) Except as provided in
AS
16.10.310(a)(11), loan
proceeds may not be used to reimburse an applicant for expenses paid more than
one year before receipt of the application by the department. The department
may waive this restriction if
(1) the
applicant shows that the application of this restriction would result in undue
hardship for the applicant;
(2) the
applicant is a good financial risk; and
(3) the state's investment is
preserved.
(k) The
department will quarterly set the interest rate for loans under
3
AAC 80.010 -
3
AAC 80.180 on the first day of each calendar quarter.
The interest rate set for a quarter remains in effect until the department
changes the rate, will not exceed the maximum or minimum interest allowed under
AS
16.10.320(a)(2), and will be
established at the nearest one-quarter point, before any credits are applied by
the department. The interest rate will be based on the bank prime rate, as
defined in
AS
44.88.599, during the previous quarter as
follows:
(1) the interest rate is based on the
cost of funds to the state as defined in
AS
16.10.320(m) for loans made
(A) to upgrade existing vessels and gear for
the purpose of improving the quality of Alaska seafood products; or
(B) for engine efficiency upgrades;
(2) for all other loans under
3
AAC 80.010 -
3
AAC 80.180, the interest rate is based on the bank
prime rate plus two percentage points.
(l) The interest rate for a loan is the
quarterly interest rate in effect at the time the loan commitment is made. The
interest rate for a loan will be at a fixed rate for the term of the
loan.
(m) Repealed
7/30/2000.
(n) If refinancing funds
are limited, the department will process refinancing requests in the following
order:
(1) first, applicants who have existing
loans made under
AS
16.10.300-16.10.370;
(2) second, applicants who are
under-collateralized on their existing loan, but who would meet the collateral
requirements of
AS
16.10.310-16.10.370 by the addition of a
limited entry permit;
(3) third,
applicants who could significantly improve their loan terms by receiving a loan
under AS
16.10.310(a)(11);
(4) fourth, applicants in default on their
existing loan who otherwise meet the requirements of
AS
16.10.310-16.10.370.
(o) To be eligible for a lower interest loan
under (k) of this section for
(1) an upgrade
to an existing vessel or gear for the purpose of improving the quality of
Alaska seafood products, an applicant must establish to the satisfaction of the
department that the upgrade to be financed with the loan will enhance product
quality; types of acceptable upgrades include refrigeration, hold insulation,
and slider reels;
(2) an engine
efficiency upgrade or replacement, an applicant must establish to the
satisfaction of the department that the upgrade or replacement to be financed
with the loan will reduce emissions or improve fuel productivity.
(p) Beginning July 30, 2000, the
department will grant a credit on an existing loan with payments due annually
if, before the late fee date as described in
3
AAC 80.075(c), the borrower paid in
full the amount due for the current calendar year. Beginning July 30, 2000, the
department will grant a credit on an existing loan with payments due monthly,
quarterly, or semi-annually if, for each payment due within a 12-month period,
the borrower paid in full the amount due before the late fee date for that
payment as described in
3
AAC 80.075(c). The amount due
includes principal, interest due, deferred interest due, fees, costs, and other
accounts receivable due. If the department grants a credit under this
subsection, the department will apply that credit beginning from the late fee
date, as described in
3
AAC 80.075(c), for the payment that
qualified the borrower for the credit. Every 12 months after that date, the
department will review the borrower's loan payment history, and will
discontinue a credit granted under this subsection if during that 12-month
period the borrower failed to make in full a payment due by the late fee date
for that payment as described in
3
AAC 80.075(c). The maximum credit
that will be granted under this subsection is one percentage point of the
annual interest rate.
Notes
Authority:AS 16.10.310
AS 16.10.320
AS 16.10.325
AS 16.10.339
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