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Current as of October 02, 2022 | Updated by FindLaw Staff
(a) Term length. The lender, with Agency concurrence, will establish and justify the guaranteed loan term based on the use of guaranteed loan funds, the useful economic life of the assets being financed and those used as collateral, and the borrower's repayment ability. The maximum term allowable for final guaranteed loan maturity is limited to the justified useful life of the project or assets used as collateral but may not exceed 40 years or limitations in the applicable State statute, whichever is less.
(b) Guaranteed loan schedule and repayment. The lender must structure repayment in consideration of the borrower's cash flow and in accordance with the provisions of this section and the loan agreement. Scheduled guaranteed loan payments shall be made no less frequently than annually. In addition:
(1) Both the guaranteed and unguaranteed portions of the loan must be amortized over the same term.
(2) Guaranteed loans must require a periodic payment schedule that will retire the debt over the term of the loan without a balloon payment.
(3) If the promissory note provides for an interest-only period, interest must be paid at least annually starting on a date that is no more than one year from the date of the promissory note. The first full payment on the guaranteed loan including principal and interest must be due and payable within three years from the date of the promissory note or as soon as the project is operational and has begun to generate income, whichever occurs first.
(4) There must be no “due-on-demand” clauses without cause. Regardless of any “due-on-demand” with cause provision in a lender's promissory note, the Agency must concur in any acceleration of the guaranteed loan unless the basis for acceleration is monetary default.
Cite this article: FindLaw.com - Code of Federal Regulations Title 7. Agriculture § 7.5001.402 Term length, loan schedule, and repayment - last updated October 02, 2022 | https://codes.findlaw.com/cfr/title-7-agriculture/cfr-sect-7-5001-402/
FindLaw Codes may not reflect the most recent version of the law in your jurisdiction. Please verify the status of the code you are researching with the state legislature or via Westlaw before relying on it for your legal needs.
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