1.1                          A bill for an act 
  1.2             relating to agriculture; providing for a farm and 
  1.3             small business loan guarantee program; appropriating 
  1.4             money. 
  1.5   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.6      Section 1.  [FARM AND SMALL BUSINESS LOAN GUARANTEE 
  1.7   PROGRAM; DEFINITIONS.] 
  1.8      Subdivision 1.  [APPLICABILITY.] The definitions in this 
  1.9   section apply to sections 1 to 6. 
  1.10     Subd. 2.  [COMMISSIONER.] "Commissioner" means the 
  1.11  commissioner of agriculture. 
  1.12     Subd. 3.  [ELIGIBLE BORROWER.] "Eligible borrower" means a 
  1.13  farmer or small business operator who applies to a participating 
  1.14  lender for a guaranteed loan and meets all qualifications in 
  1.15  section 2 or 3 and any further qualifications that may be 
  1.16  announced by the commissioner. 
  1.17     Subd. 4.  [FARMER.] "Farmer" means a Minnesota resident 
  1.18  operating a family farm, a family farm corporation, a family 
  1.19  farm partnership, or an authorized farm partnership as those 
  1.20  terms are defined in Minnesota Statutes, section 500.24, 
  1.21  subdivision 2, operating a farm within the state. 
  1.22     Subd. 5.  [GUARANTEED FARM LOAN.] "Guaranteed farm loan" 
  1.23  means an original, extended, or renegotiated loan or line of 
  1.24  credit obtained by a farmer from a lender for the purpose of 
  1.25  financing the operations of a farm.  A guaranteed farm loan 
  2.1   includes an open line of credit even though the maximum 
  2.2   principal amount of the line of credit may not be drawn at any 
  2.3   one time.  A farm loan eligible for the guaranteed loan program 
  2.4   must have a maturity date of September 30, 2000, or earlier. 
  2.5      Subd. 6.  [LENDER.] "Lender" means a bank, credit union, or 
  2.6   savings and loan association chartered by the state or federal 
  2.7   government, a unit of the farm credit system, the Federal 
  2.8   Deposit Insurance Corporation, or another financial institution 
  2.9   approved by the commissioner. 
  2.10     Subd. 7.  [PARTICIPATING LENDER.] "Participating lender" 
  2.11  means a lender who has been granted participating lender status 
  2.12  by the commissioner. 
  2.13     Subd. 8.  [SMALL BUSINESS.] "Small business" means a 
  2.14  business entity as defined in Minnesota Statutes, section 
  2.15  645.445, with its principal place of business in Minnesota at a 
  2.16  location outside the seven-county metropolitan area and outside 
  2.17  a city of the first class. 
  2.18     Subd. 9.  [SMALL BUSINESS GUARANTEED LOAN.] "Small business 
  2.19  guaranteed loan" means an original, extended, or renegotiated 
  2.20  loan or line of credit obtained by a small business for purposes 
  2.21  of financing the operations of a small business.  A small 
  2.22  business guaranteed loan eligible for a guarantee must have a 
  2.23  maturity date of September 30, 2000, or earlier. 
  2.24     Sec. 2.  [ELIGIBILITY; GUARANTEED FARM LOAN.] 
  2.25     A farmer is eligible for a guaranteed farm loan if a 
  2.26  participating lender determines that the farmer suffered a 
  2.27  decline in income between 1997 and 1998 and the farm operation 
  2.28  faces economic stress without the assistance of a guaranteed 
  2.29  farm loan.  A determination of decline in income and economic 
  2.30  stress by a lender is deemed reasonable and accurate without 
  2.31  further audit or substantiation. 
  2.32     Sec. 3.  [ELIGIBILITY; SMALL BUSINESS GUARANTEED LOAN.] 
  2.33     A small business is eligible for a small business 
  2.34  guaranteed loan if a participating lender determines that the 
  2.35  small business suffered a decline in income between 1997 and 
  2.36  1998 and the small business faces economic stress without the 
  3.1   assistance of a small business guaranteed loan.  A determination 
  3.2   of decline in income and economic stress by a lender is deemed 
  3.3   reasonable and accurate without further audit or substantiation. 
  3.4      Sec. 4.  [LENDER ELIGIBILITY; OBLIGATIONS; TIMELY 
  3.5   APPLICATION.] 
  3.6      Subdivision 1.  [ELIGIBLE PARTICIPATING LENDER STATUS.] A 
  3.7   lender who meets the requirements established by the 
  3.8   commissioner must be approved as a participating lender. 
  3.9      Subd. 2.  [RECEIPT OF APPLICATIONS FOR GUARANTEED LOANS.] A 
  3.10  participating lender shall receive and evaluate loan 
  3.11  applications from farmers and small businesses.  An eligible 
  3.12  borrower must complete a loan application with a participating 
  3.13  lender before June 30, 1999.  In determining whether to make a 
  3.14  farm or small business loan, the participating lender may use 
  3.15  criteria in addition to those in sections 2 and 3. 
  3.16     Subd. 3.  [MAXIMUM INTEREST RATE.] To qualify for a 
  3.17  guaranteed loan, a participating lender shall offer to make a 
  3.18  farm or small business loan to an eligible borrower at one 
  3.19  percent below the rate of interest offered to other borrowers 
  3.20  having similar security and financial status.  Of the 
  3.21  established rate, two percent will be paid by the borrower and 
  3.22  the balance of the interest will be paid to the participating 
  3.23  lender by the commissioner.  The commissioner, in cooperation 
  3.24  with the commissioner of commerce, may use appropriate means to 
  3.25  verify that the interest rate offered to an eligible borrower is 
  3.26  substantially the same as that available to other borrowers. 
  3.27     Subd. 4.  [PRIORITY.] (a) A properly completed application 
  3.28  for a guaranteed farm loan must receive highest priority if it 
  3.29  is from a farmer who has been approved for a 90 percent 
  3.30  guarantee loan from a federal government agency.  Other 
  3.31  applications for guaranteed farm loans take priority in the 
  3.32  order they are received by the commissioner. 
  3.33     (b) Properly completed applications for small business 
  3.34  guaranteed loans take priority in the order they are received by 
  3.35  the commissioner. 
  3.36     Sec. 5.  [RESPONSIBILITIES OF COMMISSIONER.] 
  4.1      Subdivision 1.  [ANNOUNCEMENT OF PROGRAM 
  4.2   PROCEDURES.] Within 20 days after the effective date of sections 
  4.3   1 to 6, the commissioner shall announce procedures for the 
  4.4   guaranteed loan program. 
  4.5      Subd. 2.  [PREPARATION AND DISTRIBUTION OF PARTICIPATION 
  4.6   FORMS.] The commissioner, in cooperation with the commissioner 
  4.7   of commerce, shall prepare and distribute forms and instructions 
  4.8   for the guaranteed loan program. 
  4.9      Subd. 3.  [APPROVAL OF APPLICATIONS FOR GUARANTEED 
  4.10  LOANS.] The commissioner shall review, within five working days 
  4.11  of submission by a participating lender, a properly completed 
  4.12  application for a guaranteed loan to a farm or small business.  
  4.13  If a participating lender does not receive written notice that 
  4.14  the commissioner has denied a guaranteed loan within seven 
  4.15  working days, the borrower is an eligible borrower and the 
  4.16  guaranteed loan for the farm or small business is approved by 
  4.17  the commissioner. 
  4.18     Subd. 4.  [COMMISSIONER TO PAY STATE SHARE OF INTEREST TO 
  4.19  PARTICIPATING LENDERS.] Within 60 days after a request by a 
  4.20  participating lender, the commissioner shall pay to the 
  4.21  participating lender one-half of the state's share of the 
  4.22  expected interest on the guaranteed loan.  The balance of the 
  4.23  state share of interest must be paid by the commissioner to the 
  4.24  participating lender within 30 days after the loan matures or is 
  4.25  repaid in full and the request for final payment is submitted by 
  4.26  the participating lender. 
  4.27     Sec. 6.  [STATE CONTRIBUTION; MAXIMUM LOAN.] 
  4.28     The commissioner shall guarantee the first 75 percent of 
  4.29  the first $100,000 of an approved farm or small business 
  4.30  guaranteed loan made to an eligible borrower. 
  4.31     Sec. 7.  [APPROPRIATION; GUARANTEED LOANS.] 
  4.32     $....... is appropriated from the general fund to the 
  4.33  commissioner of agriculture for the interest payments and loan 
  4.34  losses for guaranteed loans made under sections 1 to 6.  Not 
  4.35  more than $200,000 of this appropriation may be used by the 
  4.36  commissioner for program administrative costs.  This 
  5.1   appropriation is available until June 30, 2000. 
  5.2      Sec. 8.  [EFFECTIVE DATE.] 
  5.3      This act is effective the day following final enactment.