7 Pa. Code § 130c.14 - General conditions
(a)
Interest rates. The interest rate on any loan will be
calculated using simple interest at the percentage rate equal to the Federal
Reserve discount rate at the time the loan was made.
(b)
Term of loan and rate of
payment. The term of the loan may not be greater than the useful life
of the project, which shall be defined in the loan agreement. The term of the
loan may not exceed 7 years. Payments shall be made monthly, quarterly or
semiannually, as determined by the Board.
(c)
Security.
(1)
Requirement. The Board
will secure each loan before distributing the loan proceeds and its lien
position may not be less than a second position as to liens on real estate and
equipment connected with the farm operation. A loan shall be fully secured and
no part of the loan may be unsecured.
(2)
Valuation of collateral.
Real estate security shall be valued on the basis of resale value, taking into
account any liens or encumbrances on the land.
(3)
Additional security. The
Board may require other and additional security as it deems just and
reasonable, including personal liability promissory notes with confessions of
judgment, judgment notes, additional collateral, insurance and
guarantees.
(d)
Sale of real or personal property. If the recipient sells real
or personal property connected with the project which is subject to a lien in
favor of the Department or Board the principal balance of the loan and interest
incurred to date shall immediately become due and payable.
(e)
Verification. Within 3
months of the project completion date specified in the loan agreement, the
recipient shall submit to the Department a final report which includes written
receipts, records and any other pertinent documentation evidencing the total
amount of the costs incurred and expenditures associated with the project. At
the same time, the recipient shall also submit a narrative report describing
the effectiveness of the project, the results obtained, the experience gained
and the personal knowledge acquired.
(f)
Failure to verify. If
the required receipts, records and documentation are not submitted within the
3-month period or a portion of loan proceeds are unaccounted for, the Secretary
may demand the recipient repay the entire principal balance of the loan or a
lesser amount and interest incurred to date. Payment shall be due within 60
days of the written demand.
(g)
Loan agreement. A recipient shall sign a loan agreement
setting forth the term and amount of the loan, a repayment schedule and other
terms or conditions as the Department may reasonably require.
(h)
Previous default. A loan
will not be made under this chapter to an applicant who has previously
defaulted on a loan made, guaranteed or insured by the Commonwealth, the
Federal Government or by the government of another state.
(i)
Default. A recipient who
fails to abide by the terms of the act, the loan agreement or the rules in this
chapter shall be in default. Additionally, a loan will be declared in default
if the loan recipient fails to make the required payment within 30 days of the
due date. When a loan recipient defaults, the Department may seek recovery of
the loan funds as delineated in §
130c.8 (relating to right of
recovery). A default may be waived by the Secretary, after consultation with
the Board, in the event of a physical disability suffered by the recipient or
other extenuating circumstances.
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