This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

When used in these rules, unless the context clearly requires a different meaning:

(1)  The "Act" means the Montana Agricultural Loan Authority Act, created by S.B. 316, (1983)  , and codified in Title 80, chapter 12, MCA.

(2)  "Agricultural improvements" means any improvements, buildings, structure or fixtures suitable for use in farming/ranching which are located on agricultural land and may include an existing dwelling for residence.

(3)  "Agricultural land", as defined in 80-12-102, MCA, means land actively devoted to agricultural use as defined in 15-7-202, MCA.  

(4)  "Application" means a completed instrument on a form approved by the authority.   Each application must include the following:   beginning farmer/rancher name, address, financial data, description of anticipated use of loan proceeds, amount of loan, cost or purchase price of the item financed (including the interest rate and collateral or other security required)  , statement of beginning farmer's/rancher's net worth determined in accordance with authority rules, a summary of proposed loan terms and certain certifications of the beginning farmer/rancher and financial institution.

(5)  The "authority" means the department of agriculture provided for in 2-15-3001, MCA.

(6)  "Beginning farmer/rancher" means an individual who meets all qualifications required under 80-12-203(1)  and (2)  , MCA.

(7)  The "department" means the Montana department of agriculture.

(8)  "Depreciable agricultural property" means personal property suitable for use in farming/ranching for which an income tax deduction for depreciation is allowable in computing federal income tax and which is located on agricultural land.

(9)  "Farming/ranching" means the cultivation of land for the production of agricultural crops, the raising of poultry, the production of eggs, the production of milk, the production of fruit or other horticultural crops, grazing or the production of livestock or the production of timber, or sod or other agricultural enterprises on agricultural land.   Farming/ranching shall not include spraying, harvesting, or providing other farm/ranch services on contract.

(10)  "Financial institution or bond purchaser" means any bank, bank holding company, trust company, mortgage company, national banking association, savings and loan association, credit union, life insurance company, any state or federal government agency or instrumentality, any other entity authorized to make mortgage loans or secured loans in this state or any person that obtains an authority bond under the program in connection with a contract sale or loan to a beginning farmer/rancher.

(11)  "Loan agreement" means a loan agreement, financing agreement, installment purchase agreement or any other agreement entered into by the authority with the beginning farmer/rancher or financial institution in connection with the issuance of the authority's bond under this program.

(12)  "Net worth" means total assets minus total liabilities as determined by the financial institution, in accordance with rules of the authority and generally accepted accounting procedures.

(13)  "Total assets" means assets including, but not limited to the following:   cash and deposits in financial institutions etc.; cash crops or feed on hand; livestock held for sale; breeding stock; 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, personal residence and summer homes; value of beneficial interest in a trust, government payments or grants; any other assets.

(a)  Total assets shall not include items used for personal, family or household purposes by the applicant, but in no event shall such property be excluded to the extent a deduction for depreciation is allowable for federal income tax purposes.   All assets shall be valued at fair market value by the financial institution.   Such value shall be what a willing buyer would pay a willing seller in the locality.   A deduction of 10% may be made from fair market value of farm and other real estate.

(14)  "Total liabilities" means liabilities including, but not limited to the following:   accounts payable; notes or other indebtedness owed to any source; taxes; rent; leases; amount owed on real estate contracts or real estate mortgages; judgements; accrued interest payable; and other liabilities.   Contingent liabilities cannot be included in the computation of total liabilities, but all such contingent liabilities shall be disclosed.

(1)  Title 80, chapter 12, MCA, authorizes the authority to provide loans for a variety of purposes.

(2)  Eligible loan activities consist of financing purchases of depreciable agricultural property, agricultural improvements, and agricultural land.

(a)  The authority will finance purchase of personal property suitable for use in farming/ranching for which an income tax deduction for depreciation is allowable in computing federal income taxes and which is located on agricultural land.   Examples are: livestock used for breeding purposes, farm/ranch machinery, trucks, etc. Feeder cattle, pigs or lambs do not qualify as depreciable property.

(b)  The authority will finance the purchase of improvements, buildings, structures or fixtures located on agricultural land which are suitable for use in farming/ranching. Examples are: confinement systems for swine, cattle, or poultry, barns and other out buildings, grain storage facilities, silos, tilling and soil conservation practices such as terraces, farm ponds, erosion control structures, waterways, etc.

(c)  The authority will finance the purchase of land in Montana suitable for farming/ranching and which is or will be operated for farming/ranching purposes by an individual beginning farmer/rancher who will be the principal user of such land and who will materially and substantially participate in the operation and management of the farm/ranch. Purchase of land for speculative purposes is ineligible for loan under this program.   The purchase of land that is entirely enrolled in conservation reserve program (CRP)  is not permitted.Depending on whether a portion of the loan is used to finance a house (not to exceed 5%)  , 20 to 25% of the loan proceeds may be used to purchase CRP acres.

(d)  Loan application for the exclusive purpose of acquiring a personal residence is not eligible for a loan under this program.

(3)  All funds provided by the authority from the sale of bonds will be administered under the terms and conditions of applicable state and federal law, appropriate state and federal rules and regulations including those of the authority and any agreements and contracts deemed necessary by the authority.

This rule has been repealed.

This rule has been repealed.

(1) Basic program applicant eligibility requirements are:

(a) The beginning farmer/rancher must be a minimum of 18 years of age;

(b) The beginning farmer/rancher must be a resident of Montana at the time the loan is closed;

(c) The beginning farmer/rancher must have documented, to the satisfaction of the financial institution and the authority, sufficient education, training and experience for the anticipated farming/ranching operations for which the loan is sought; and

(d) The beginning farmer/rancher must, as a condition of loan closing, demonstrate to the satisfaction of the financial institution and the authority, access to the following as may be needed: adequate working capital, farm/ranch machinery, livestock and agricultural land.

(a)  Application and other forms will be provided by the authority to financial institutions as necessary.  Financial institutions may use their own financial statement and other forms deemed necessary to document the eligibility of the beginning farmer's/rancher's ability to repay principal and interest payments; and

(b)  There is no formal or defined application period.  The loan program is ongoing, therefore, a beginning farmer/rancher may apply at any time.

(2)  The authority will make the loan to the eligible beginning farmer/rancher and the financial institution will purchase the bond as an investment or the loan will be made from a portion of an aggregate bond sale.  To facilitate the servicing of the loan the financial institution and the authority will enter into an agency relationship whereby the financial institution agrees to act as agent and fiduciary for the authority for all purposes in connection with servicing the loan.

(3)  The financial institution will make its own security evaluation of the loan and the beginning farmer's/rancher's ability to repay principal and interest payments.  The interest rate and other conditions of the loan are set by the financial institution.  The interest rate may be either variable or fixed for the term of the loan as long as the method for determining the rate is contained in the loan agreement and the rate is reasonable as determined by the authority.

(4)  In no case may the loan repayment period (term)  exceed 30 years.  The principal and interest shall be limited obligations, payable solely out of the revenue derived from the debt obligation, collateral, or other security furnished by or on the behalf of the beginning farmer/rancher (a co-signer on the note is permissible)  .

(5)  The bond which is issued by the authority is a non-recourse obligation.   The principal and interest on the bond do not constitute an indebtedness of the authority or a charge against its general credit or general fund. It should also be noted that any recording or filing fees associated with the loan will be paid by the beginning farmer/rancher or financial institution not the authority.

(1)  The financial institution should use its own forms of financial statements and security documents which it may feel necessary and appropriate under particular loan circumstances.   These items should be referenced in an exhibit to the bond or loan agreement and their provisions incorporated therein.   Any additional requirements not specifically provided for in the bond or loan agreement, such as insurance coverage and amounts, should be added by means of an exhibit to the bond or loan agreement and their provisions incorporated therein.

(2)  Any security documents or guarantees required to be delivered in connection with a loan should clearly state that they are given as additional security for the indebtedness evidenced by the promissory note, the loan agreement, the authority's bond and to further secure the agreements, covenants and obligations of the beginning farmer/rancher contained therein.   The security documents and any guarantees should run directly between the beginning farmer/rancher and the financial institution.   The financial institution may also wish to add a "cross-default" provision to these documents, making an event of default under the security documents or guarantee and vice versa.

(2)  The beginning farmer/rancher repayment obligations under the loan agreement and promissory note are subject to optional prepayment under terms and conditions to be agreed upon between the beginning farmer/rancher and the financial institution.   The documents and the structure of the financing require any installment payment made under the loan agreement and promissory note to be applied against a like installment payable under the bond and the financial institution agrees that any such prepayments will be so applied to the payment of the bond.

(2)  In addition, the authority will receive a non-refundable $50 application fee (submitted by the beginning farmer/rancher with the application)  and a program participation or loan fee not to exceed 1 1/2% of the amount of the loan, however, this fee shall not be less than $500.   The participation fee may be financed with the loan.   The financial institution shall collect the participation fee and remit to the authority at the time of loan closing.

(3)  The authority bond counsel will review each bond for legality and tax exemption.   The authority will pay its bond counsel and other administrative costs from the fees collected from the beginning farmer/rancher.

(2) Basic authority eligibility requirements for a beginning farmer/rancher are:

(a) The beginning farmer/rancher may not have a net worth in excess of $250,000;

(b) The beginning farmer/rancher must be a minimum of 18 years of age;

(c) The beginning farmer/rancher must be a resident of Montana at the time the loan is closed;

(d) The beginning farmer/rancher must have documented, to the satisfaction of the authority , sufficient education, training and experience for the anticipated farming/ranching operations; and

(e) The authority may require certain documents to determine eligibility.

(3) The authority may conduct additional inquiries or investigations as necessary to determine the accuracy and completeness of an application.

(4) The beginning farmer/rancher need not be a recipient of an authority loan.

(5) A non-refundable $25 application fee will be charged by the authority and must accompany the appropriate application form (obtainable from the authority) to cover administrative costs.