a)
General Description of Program. The Specialized Livestock Guarantee Program
(SLP) is designed to enhance opportunities for many Illinois farmers who want
to position themselves for success in the changing livestock industry. This
program targets specialized, family sized livestock operations, including swine
and dairy and beef cattle operations. Loan funds may be used primarily for
construction, purchase, and/or remodeling of facilities, and also for purchases
of equipment, breeding livestock or other capital assets. In some cases, loan
proceeds may be used to refinance existing debt as needed to improve lien
positions or improve financial structure. The provisions of this Section are
applicable only to the SLP.
b)
Definitions
Words defined in the Illinois Finance Authority Act and in
Section
1100.50 have the same
meaning when used in this Subpart unless a more specific definition is
prescribed in this Section. This Section establishes additional definitions for
use in this Subpart only.
"Applicant" means a farmer whose application for a
Specialized Livestock Guarantee has been submitted to the Authority by a
lender.
"Asset" includes, but is not limited to, the following: crops
or feed on hand; livestock held for sale; breeding stock; cash; marketable
bonds and securities; securities not readily marketable; accounts receivable;
notes receivable; cash invested in growing crops; net cash value of life
insurance; machinery and equipment; cars and trucks; farm and other real estate
including life estates and personal residence; value of beneficial interest in
trusts; government payments or grants; capitalized leases; retirement accounts;
and any other assets.
"Debt to Asset Ratio" means total outstanding liabilities,
including any debt to be financed or refinanced under this Section, divided by
total assets.
"Fund" means the Illinois Farmer and Agribusiness Loan
Guarantee Fund, which is the State's fund to cover losses resulting from
defaults on Specialized Livestock Guarantee loans.
"Liability" includes, but is not limited to, the following:
accounts payable; notes or other indebtedness owed to any source; taxes; rent;
amounts owed on real estate contracts or real estate mortgages; judgments
accrued; interest payable; indebtedness under capitalized leases; and any other
liability.
"SLP Loan" means an installment note for which the State of
Illinois shall be liable for 85% of the total principal and interest as
determined by the Authority.
c) Eligible Farmers. To qualify for
participation in the SLP, the
applicant must:
1) be a resident of the State of Illinois. In
the case of entities other than sole proprietorships, the owners of such entity
must be Illinois residents.
2) be
the principal operator and/or materially involved in the operation.
3) have adequate cash flow and
collateral.
4) certify to the
Authority that, at the time the State Guarantee is provided, the borrower will
not be delinquent in the repayment of any debt. [20 ILCS
3501/830-50 ]
d) Limitations
1) SLP loans shall not exceed $1,000,000 per
applicant. An applicant may use this program more than once, provided the
aggregated principal of SLP loans to that applicant does not exceed $1,000,000.
[20 ILCS 3501/830-50]
2) Each SLP
loan shall be no longer than 15 years in duration. [20 ILCS 3501/830-50] The
payment schedule for the loan will be tailored to the applicant's collateral
and cash flow.
3) The SLP Loan can
be fully or partially paid at any time while the loan is outstanding as long as
the loan is held in the lender's portfolio and not sold into a secondary
market. SLP Loans may not be assumed.
e) Application Procedures and Review
1) Lenders shall apply for the State
Guarantees on forms provided by the Authority and certify that the application
and any other documents submitted are true and correct. The application shall,
at a minimum, contain the farmer's name, address, present credit and financial
information, including cash flow statements, financial statements, balance
sheets, and any other information pertinent to the application, and the
collateral to be used to secure the State Guarantee. [20 ILCS 3501/830-50]
Applications shall be processed by the Authority on a first-come, first-served
basis, based upon the receipt of all completed documents by the
Authority.
2) Each applicant shall
pay a $300 application fee which will be submitted to the Authority at the time
of the application. At the time the loan is closed, the applicant will be
required to pay a closing fee of 1% of the SLP Loan amount less the $300
application fee. Of this 1% closing fee, the Authority shall receive 3/4% and
the lender shall receive 1/4% to cover administrative expenses in completing
the application packet and closing documents. The 1% closing fee may be
included in the State Guarantee Loan amount. The lender shall charge no fees or
points in addition to those outlined herein. The applicant shall be responsible
for paying any fee or charge involved in recording mortgages, releases,
financing statements, insurance for secondary market issues, and any other
similar fee or charge that the Authority may require. [20 ILCS
3501/830-50 ]
3) Thelendermust agree to charge a fixed or
adjustable interest rate that the Authority determines to be below the market
rate of interest generally available to the borrower. If both the lender and
applicant agree, the interest rate on the State guaranteed loan can be
converted to a fixed interest rate at any time during the term of the loan. [20
ILCS 3501/830-50]
4) When a State
Guarantee application is submitted to the Authority, the Authority shall review
the application to determine whether it is complete and whether it meets the
criteria established by the Act and this Section. When the Authority has
completed the review of the Guarantee application, the application shall be
presented, along with a statement of recommended action, to the Board for
review at its next regularly scheduled meeting. The review shall include
whether the applicant and lender are in compliance with the requirements of the
program. The review shall also include an evaluation of collateral, percentage
of loan, debt to asset ratio, cash flow, etc.
5) The Board shall approve the application
and provide the Guarantee, pursuant to the Act and this Section; or, deny the
application and serve upon the lender and applicant a written statement of the
grounds for the denial.
6) If the
application is denied, the applicant and the lender may request reconsideration
stating reasons why the Board should withdraw its denial of the application and
approve the State Guarantee. The request should be accompanied by supporting
documents and/or information not previously considered by the Board. The Board
shall review the request at its next scheduled meeting, and shall either
approve or deny the application. A denial of a request for reconsideration
shall be final.
7) Upon approval of
an application and receipt of the documentation necessary to prepare loan
closing documents, an SLP Loan Closing Documents package, which contains all
the appropriate forms and documents to execute, shall be prepared by the
Authority and sent to the lender. Upon completion of all such forms and
documents by the applicant, lender and Authority and after satisfaction of all
loan closing requirements, the SLP Loan guarantee will be considered in
force.
f) Provision of
Renewal of State Guarantees. The
Authority shall provide or renew a State
Guarantee to anylenderif:
1) the lender pays
a fee equal to 25 basis points on the loan to the Authority on an annual basis
[20 ILCS 3501/830-50];
2) the
applicant provides collateral acceptable to the Authority that is at least
equal to the State Guarantee [20 ILCS 3501/830-50];
3) the lender certifies that, to the best of
the lender's knowledge, all information is true and correct on the application,
balance sheets, security analysis, cash flow projection and any other documents
submitted;
4) thelenderassumes all
responsibility and costs for pursuing legal action on collecting any loan that
is delinquent or in default [20 ILCS 3501/830-50];
5) thelenderis at risk for the first 15% of
the outstanding principal of the note for which the State Guarantee is provided
[20 ILCS 3501/830-50];
6) the
lender assumes responsibility for the timely collection and disposition of
collateral on an SLP Loan that is in default; provided, however, that the
lender shall not collect or dispose of collateral on the SLP loan without the
express written prior approval of the Authority. Approval shall be granted if
the collateral is disposed of in a commercial manner, which nets an amount
closely approximating the value of the collateral;
7) the lender agrees that the Authority has
final approval on the sale of all collateral for the SLP loan. After the sale
of collateral, the State shall be reimbursed its 85% guaranteed portion of the
principal balance at default. If funds from the sale of collateral remain after
this payment, the lender shall be reimbursed its 15% of the principal balance
at default. If excess funds remain after paying the principal to the State and
lender, then the State and lender shall be repaid interest on a prorated basis;
85% of such excess funds shall be allocated to the State's portion and 15%
shall be allocated to the lender's portion.
g) The SLP Loan shall be reviewed annually by
the
lender and IFA for adequacy of collateral and performance by the
applicant.
The
applicant is required to provide the lender with a current financial
statement annually.
1) If it is determined
that there is not sufficient collateral to adequately secure the SLP Loan,
additional collateral may be required. If the applicant is unwilling or unable
to pledge additional collateral, the SLP Loan may be called due and
payable.
2) If an SLP Loan is going
to be called for any reason, written notice which specifies the reasons for
said action must be served to all parties (IFA, lender, and borrower) not less
than 90 days prior to call of the loan.
3) Failure of the applicant to make any
payment on or before its due date shall render the loan delinquent. Notice of
this delinquency shall immediately be sent to all parties. If the loan remains
delinquent for a period of 90 days, the total outstanding principal and
interest shall become due and payable immediately on the entire SLP Loan. The
SLP Loan cannot be reinstated after the 90-day delinquency period.
h) In the event of default that is
not cured within 90 days or in the event a loan is called for any reason, the
Authority shall make payment of the guaranteed portion of the SLP Loan to the
holder of the guarantee. This payment shall be equal to the sum of:
1) 85% of the principal balance as of the
date of default or date of call less any proceeds received from sales of
collateral;
2) 85% of the interest
balance as of the date of default or call; and
3) 85% of the interest accrued from the date
of default or call until the date payment is made, up to a maximum of 120
days.
i) The Illinois
Farmer and
Agribusiness Loan Guarantee
Fund shall be used to secure State
Guarantees on SLP Loans. [20 ILCS 3501/830-50]
1) The Authority shall guarantee up to
$50,000,000 in loans through the SLP, YFG and SGPAI. The Illinois Farmer and
Agribusiness Loan Guarantee Fund shall be funded with $15,000,000 to cover any
losses under these programs.
2) The
Authority shall direct payments from this fund to guarantee holders as
described in subsection (h).
3)
Monies returned to the State on the disposition of collateral as described in
subsection (f) shall be deposited to this fund.