(a) The department of agriculture may insure up to ninety per cent of the principal balance of a loan, plus interest due thereon, made to a qualified farmer, qualified new farmer, or qualified food manufacturer by a private lender who is unable to otherwise lend the applicant sufficient funds at reasonable rates; provided that at no time shall the aggregate amount of the State’s liability, contingent or otherwise, on loans insured under this section and § 155-6 exceed $10,000,000.
lawyer at desk

Ask a business law question, get an answer ASAP!
Thousands of highly rated, verified business lawyers.
Click here to chat with a lawyer about your rights.

Terms Used In Hawaii Revised Statutes 155-5

  • Food manufacturers: means entities that process Hawaii-grown agricultural products or that utilize Hawaii-grown agricultural products as an ingredient in the manufacturing process. See Hawaii Revised Statutes 155-1
  • Foreclosure: A legal process in which property that is collateral or security for a loan may be sold to help repay the loan when the loan is in default. Source: OCC
  • Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
  • New farmer: means a new farm enterprise or a person, who by reason of ability, experience, and training, is likely to successfully operate a farm and who otherwise meets the eligibility requirements of § 155-10 and includes any of the following:

    (1) Persons displaced from employment in an agricultural production enterprise;

    (2) College graduates in agriculture;

    (3) Community college graduates in agriculture;

    (4) Members of the Hawaii Young Farmer Association and National FFA Organization graduates with farming projects;

    (5) Persons who have not less than two years' experience as part-time farmers;

    (6) Graduates from farm trainee programs designed to provide interns with the necessary hands-on skills and management training to successfully operate their own farm;

    (7) Persons who have been farm tenants or farm laborers; or

    (8) Other individuals who have for the two years last preceding their application obtained the major portion of their income from farming operations. See Hawaii Revised Statutes 155-1

  • Private lender: includes banks, savings and loan associations, credit unions, mortgage companies, and other qualified companies whose business includes the making of loans in the State. See Hawaii Revised Statutes 155-1
  • Qualified farmer: means a person of proven farming ability who operates the person's own farm on land owned by the person in fee or on land rented or leased from others and who is presently devoting, has recently devoted, or intends to devote most of the person's time or who derives a major portion of the person's net cash income from direct participation in farming in its broadest sense. See Hawaii Revised Statutes 155-1
(b) Loans insured under this section shall be limited by the provisions of sections 155-9 through 155-13 for purposes of class “A” through class “I”; provided that class “E” loans to food manufacturers shall not be subject to § 155-10.
(c) Interest charged on an insured loan made under the provisions of this section shall be determined by the department of agriculture based on the market rate of interest charged by the private lender for similar type of loan.
(d) When the application for an insured loan has been approved by the department, the department shall issue to the lender a guaranty for that percentage of the loan on which it insures payment of principal and interest. The lender shall collect all payments from the borrower and otherwise service the loan.
(e) In return for the department’s guaranty, the lender shall remit a one-time insurance fee of two per cent on the principal amount of the insured portion of the loan, at the time the loan is booked, except for the following:

(1) On loans of $75,000 or less with a maturity exceeding twelve months, a reduced fee of one per cent; and
(2) On all guaranteed loans with a maturity of twelve months or less, a reduced fee of one per cent; shall be paid.

This fee may be paid by the borrower as a cost for the loan.

(f) When any installment of principal and interest has been due for sixty days and has not been paid by the borrower, the department shall issue, on request of the lender, a check for the percentage of the overdue payment guaranteed, thereby acquiring a division of interest in the collateral pledged by the borrower in proportion to the amount of the payment. The department shall be reimbursed for any amounts so paid plus the applicable interest rate, where payment is collected from the borrower.
(g) Under conditions specified in regulations of the department, the lender may request that a portion or all of the guaranteed percentage of the principal balance of the loan be converted to a participating share held by the department subject to § 155-6.
(h) Should the lender deem that foreclosure proceedings are necessary to collect moneys due from the borrower, it shall so notify the department. Within thirty days of the notification, the department may elect to request an assignment of the loan on payment in full to the lender of the principal balance and interest due. Foreclosure proceedings shall be held in abeyance in the interim.
(i) The lender may reduce the percentage of the principal balance insured under this section at any time.

  Previous
Next  
 Part I Contents