S.Amdt. 986

1. Rewrites page 447, line 10 through page 460, line 18

   ReplacesPrinted page

   Removes page 447, line 10 through page 460, line 18 of the printed bill. See that page

   Inserted: (2) Exceptions.--In this subsection, the term 'direct operating loan' does not include--

   Inserted: (A) a loan made to a youth under subsection (d); or

   Inserted: (B) a microloan made to a beginning farmer or rancher or a veteran farmer or rancher (as defined in section 2501(e) of the Food Agriculture, Conservation, and Trade Act of 1990 (7 U.S.C. 2279(e)).

   Inserted: (3) Waivers.--

   Inserted: (A) Farm operations on tribal land.--The Secretary shall waive the limitation under paragraph (1)(C) for a direct loan made under this chapter to a farmer whose farm land is subject to the jurisdiction of an Indian tribe and whose loan is secured by 1 or more security instruments that are subject to the jurisdiction of an Indian tribe if the Secretary determines that commercial credit is not generally available for such farm operations.

   Inserted: (B) Other farm operations.--On a case-by-case determination not subject to administrative appeal, the Secretary may grant a borrower a waiver, 1 time only for a period of 2 years, of the limitation under paragraph (1)(C) for a direct operating loan if the borrower demonstrates to the satisfaction of the Secretary that--

   Inserted: (i) the borrower has a viable farm operation;

   Inserted: (ii) the borrower applied for commercial credit from at least 2 commercial lenders;

   Inserted: (iii) the borrower was unable to obtain a commercial loan (including a loan guaranteed by the Secretary); and

   Inserted: (iv) the borrower successfully has completed, or will complete within 1 year, borrower training under section 3419 (from which requirement the Secretary shall not grant a waiver under section 3419(f)).

   Inserted: (d) Youth Loans.--

   Inserted: (1) In general.--Notwithstanding subsection (b), except for citizenship and credit requirements, a loan may be made under this chapter to a youth who is a rural resident to enable the youth to operate an enterprise in connection with the participation in a youth organization, as determined by the Secretary.

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   Inserted: (2) Full personal liability.--A youth receiving a loan under this subsection who executes a promissory note for the loan shall incur full personal liability for the indebtedness evidenced by the note, in accordance with the terms of the note, free of any disability of minority.

   Inserted: (3) Cosigner.--The Secretary may accept the personal liability of a cosigner of a promissory note for a loan under this subsection, in addition to the personal liability of the youth borrower.

   Inserted: (4) Youth enterprises not farming.--The operation of an enterprise by a youth under this subsection shall not be considered the operation of a farm under this subtitle.

   Inserted: (5) Relation to other loan programs.--Notwithstanding any other provision of law, if a borrower becomes delinquent with respect to a youth loan made under this subsection, the borrower shall not become ineligible, as a result of the delinquency, to receive loans and loan guarantees from the Federal government to pay for education expenses of the borrower.

   Inserted: (e) Pilot Loan Program To Support Healthy Foods for the Hungry.--

   Inserted: (1) Definition of gleaner.--In this subsection, the term 'gleaner' means an entity that--

   Inserted: (A) collects edible, surplus food that would be thrown away and distributes the food to agencies or nonprofit organizations that feed the hungry; or

   Inserted: (B) harvests for free distribution to the needy, or for donation to agencies or nonprofit organizations for ultimate distribution to the needy, an agricultural crop that has been donated by the owner of the crop.

   Inserted: (2) Program.--Not later than 180 days after the date of enactment of this subsection, the Secretary shall establish, within the operating loan program established under this chapter, a pilot program under which the Secretary makes loans available to eligible entities to assist the entities in providing food to the hungry.

   Inserted: (3) Eligibility.--In addition to any other person eligible under the terms and conditions of the operating loan program established under this chapter, gleaners shall be eligible to receive loans under this subsection.

   Inserted: (4) Loan amount.--

   Inserted: (A) In general.--Each loan issued under the program shall be in an amount of not less than $500 and not more than $5,000.

   Inserted: (B) Redistribution.--If the eligible recipients in a State do not use the full allocation of loans that are available to eligible recipients in the State under this subsection, the Secretary may use any unused amounts to make loans available to eligible entities in other States in accordance with this subsection.

   Inserted: (5) Loan processing.--

   Inserted: (A) In general.--The Secretary shall process any loan application submitted under the program not later than 30 days after the date on which the application was submitted.

   Inserted: (B) Expediting applications.--The Secretary shall take any measure the Secretary determines necessary to expedite any application submitted under the program.

   Inserted: (6) Paperwork reduction.--The Secretary shall take measures to reduce any paperwork requirements for loans under the program.

   Inserted: (7) Program integrity.--The Secretary shall take such actions as are necessary to ensure the integrity of the program established under this subsection.

   Inserted: (8) Maximum amount.--Of funds that are made available to carry out this chapter, the Secretary shall use to carry out this subsection a total amount of not more than $500,000.

   Inserted: (9) Report.--Not later than 180 days after the maximum amount of funds are used to carry out this subsection under paragraph (8), the Secretary shall submit to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate a report that describes the results of the pilot program and the feasibility of expanding the program.

   Inserted: SEC. 3202. PURPOSES OF LOANS.

   Inserted: (a) Direct Loans.--A direct loan (including a microloan as defined by the Secretary) may be made under this chapter only--

   Inserted: (1) to pay the costs incident to reorganizing a farm for more profitable operation;

   Inserted: (2) to purchase livestock, poultry, or farm equipment;

   Inserted: (3) to purchase feed, seed, fertilizer, insecticide, or farm supplies, or to meet other essential farm operating expenses, including cash rent;

   Inserted: (4) to finance land or water development, use, or conservation;

   Inserted: (5) to pay loan closing costs;

   Inserted: (6) to assist a farmer in changing the equipment, facilities, or methods of operation of a farm to comply with a standard promulgated under section 6 of the Occupational Safety and Health Act of 1970 (29 U.S.C. 655) or a standard adopted by a State under a plan approved under section 18 of that Act (29 U.S.C. 667), if the Secretary determines that without assistance under this paragraph the farmer is likely to suffer substantial economic injury in complying with the standard;

   Inserted: (7) to train a limited-resource borrower receiving a loan under section 3106 in maintaining records of farming operations;

   Inserted: (8) to train a borrower under section 3419;

   Inserted: (9) to refinance the indebtedness of a borrower, if the borrower--

   Inserted: (A) has refinanced a loan under this chapter not more than 4 times previously; and

   Inserted: (B)(i) is a direct loan borrower under this subtitle at the time of the refinancing and has suffered a qualifying loss because of a natural or major disaster or emergency; or

   Inserted: (ii) is refinancing a debt obtained from a creditor other than the Secretary;

   Inserted: (10) to provide other farm or home needs, including family subsistence; or

   Inserted: (11) to assist a farmer in the production of a locally or regionally produced agricultural food product (as defined in section 3601(e)(11)(A)), including to qualified producers engaged in direct-to-consumer marketing, direct-to-institution marketing, or direct-to-store marketing, business, or activities that produce a value-added agricultural product (as defined in section 231(a) of the Agricultural Risk Protection Act of 2000 (7 U.S.C. 1632a(a))).

   Inserted: (b) Guaranteed Loans.--A loan may be guaranteed under this chapter only--

   Inserted: (1) to pay the costs incident to reorganizing a farm for more profitable operation;

   Inserted: (2) to purchase livestock, poultry, or farm equipment;

   Inserted: (3) to purchase feed, seed, fertilizer, insecticide, or farm supplies, or to meet other essential farm operating expenses, including cash rent;

   Inserted: (4) to finance land or water development, use, or conservation;

   Inserted: (5) to refinance indebtedness;

   Inserted: (6) to pay loan closing costs;

   Inserted: (7) to assist a farmer in changing the equipment, facilities, or methods of operation of a farm to comply with a standard promulgated under section 6 of the Occupational Safety and Health Act of 1970 (29 U.S.C. 655) or a standard adopted by a State under a plan approved under section 18 of that Act (29 U.S.C. 667), if the Secretary determines that without assistance under this paragraph the farmer is likely to suffer substantial economic injury due to compliance with the standard;

   Inserted: (8) to train a borrower under section 3419; or

   Inserted: (9) to provide other farm or home needs, including family subsistence.

   Inserted: (c) Hazard Insurance Requirement.--The Secretary may not make a loan to a farmer under this chapter unless the farmer has, or agrees to obtain, hazard insurance on the property to be acquired with the loan.

   Inserted: (d) Private Reserve.--

   Inserted: (1) In general.--Notwithstanding any other provision of this title, the Secretary may reserve a portion of any loan made under this chapter to be placed in an unsupervised bank account that may be used at the discretion of the borrower for the basic family needs of the borrower and the immediate family of the borrower.

   Inserted: (2) Limit on size of the reserve.--The size of the reserve shall not exceed the lesser of--

   Inserted: (A) 10 percent of the loan;

   Inserted: (B) $5,000; or

   Inserted: (C) the amount needed to provide for the basic family needs of the borrower and the immediate family of the borrower for 3 calendar months.

   Inserted: (e) Loans to Local and Regional Food Producers.--

   Inserted: (1) Training.--The Secretary shall ensure that loan officers processing loans under subsection (a)(11) receive appropriate training to serve borrowers and potential borrowers engaged in local and regional food production.

   Inserted: (2) Valuation.--

   Inserted: (A) In general.--The Secretary shall develop ways to determine unit prices (or other appropriate forms of valuation) for crops and other agricultural products, the end use of which is intended to be in locally or regionally produced agricultural food products, to facilitate lending to local and regional food producers.

   Inserted: (B) Price history.--The Secretary shall implement a mechanism for local and regional food producers to establish price history for the crops and other agricultural products produced by local and regional food producers.

   Inserted: (3) Outreach.--The Secretary shall develop and implement an outreach strategy to engage and provide loan services to local and regional food producers.

   Inserted: SEC. 3203. RESTRICTIONS ON LOANS.

   Inserted: (a) Requirements.--

   Inserted: (1) In general.--Except as provided in paragraph (3), the Secretary may not make or guarantee a loan under this chapter--

   Inserted: (A) that would cause the total principal indebtedness outstanding at any 1 time for loans made under this chapter to any 1 borrower to exceed--

   Inserted: (i)(I) in the case of a loan made by the Secretary, $300,000; or

   Inserted: (II) in the case of a loan guaranteed by the Secretary, $700,000 (as modified under paragraph (2)); or

   Inserted: (B) for the purchasing or leasing of land other than for cash rent, or for carrying on a land leasing or land purchasing program.

   Inserted: (2) Modification.--The amount specified in paragraph (1)(A)(ii) shall be--

   Inserted: (A) increased, beginning with fiscal year 2000, by the inflation percentage applicable to the fiscal year in which the loan is guaranteed; and

   Inserted: (B) reduced by the unpaid indebtedness of the borrower on loans under sections specified in section 3104 that are guaranteed by the Secretary.

   Inserted: (3) Microloans.--

   Inserted: (A) In general.--Subject to subparagraph (B), the Secretary may establish a program to make or guarantee microloans.

   Inserted: (B) Limitation.--The Secretary shall not make or guarantee any microloan (as defined by the Secretary) under this chapter--

   Inserted: (i) for an amount that is greater than $35,000; or

   Inserted: (ii) that would cause the total principal indebtedness outstanding at any 1 time for microloans made under this chapter to any 1 borrower to exceed $70,000.

   Inserted: (C) Applications.--To the maximum extent practicable, the Secretary shall limit the administrative burdens and streamline the application and approval process for microloans under this paragraph.

   Inserted: (D) Cooperative lending projects.--

   Inserted: (i) In general.--Subject to clause (ii), the Secretary may contract with community-based and nongovernmental organizations, States, or other intermediaries, as the Secretary determines appropriate--

   Inserted: (I) to make or guarantee a microloan under this paragraph; and

   Inserted: (II) to provide business, financial, marketing, and credit management services to borrowers.

   Inserted: (ii) Requirements.--Before contracting with an entity described in clause (i), the Secretary shall--

   Inserted: (I) review and approve--

   Inserted: (aa) the loan loss reserve fund for microloans established by the entity; and

   Inserted: (bb) the underwriting standards for microloans of the entity; and

   Inserted: (II) establish such other requirements for contracting with the entity as the Secretary determines necessary.

   Inserted: (iii) Revolving loan.--Under such conditions as the Secretary may require, an entity described in clause (i) that enters into a contract with the Secretary under this subparagraph may elect to convert the loan loss reserve fund for microloans established by the entity into a revolving loan fund to carry out the purposes of this subparagraph.

   Inserted: (b) Inflation Percentage.--For purposes of this section, the inflation percentage applicable to a fiscal year is the percentage (if any) by which--

   Inserted: (1) the average of the Prices Paid By Farmers Index (as compiled by the National Agricultural Statistics Service of the Department) for the 12-month period ending on August 31 of the immediately preceding fiscal year; exceeds

   Inserted: (2) the average of that index (as so defined) for the 12-month period ending on August 31, 1996.

   Inserted: SEC. 3204. TERMS OF LOANS.

   Inserted: (a) Personal Liability.--A borrower of a loan made under this chapter shall secure the loan with the full personal liability of the borrower and such other security as the Secretary may prescribe.

   Inserted: (b) Interest Rates.--

   Inserted: (1) Maximum rate.--

   Inserted: (A) In general.--Except as provided in paragraphs (2) and (3), the interest rate on a loan made under this chapter (other than a guaranteed loan) shall be determined by the Secretary at a rate not to exceed the sum obtained by adding--

   Inserted: (i) the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturity of the loan; and

   Inserted: (ii) an additional charge not to exceed 1 percent, as determined by the Secretary.

   Inserted: (B) Adjustment.--The sum obtained under subparagraph (A) shall be adjusted to the nearest \1/8\ of 1 percent.

   Inserted: (2) Guaranteed loan.--The interest rate on a guaranteed loan made under this chapter shall be such rate as may be agreed on by the borrower and the lender, but may not exceed any rate prescribed by the Secretary.

   Inserted: (3) Low income loan.--The interest rate on a microloan to a beginning farmer or rancher or a veteran farmer or rancher (as defined in section 2501(e) of the Food Agriculture, Conservation, and Trade Act of 1990 (7 U.S.C. 2279(e)) or a direct loan made under this chapter to a low-income, limited-resource borrower shall be determined by the Secretary at a rate that is not--

   Inserted: (A) greater than the sum obtained by adding--

   Inserted: (i) an amount that does not exceed \1/2\ of the current average market yield on outstanding marketable obligations of the United States with a maturity of 5 years; and

   Inserted: (ii) an amount not to exceed 1 percent per year, as the Secretary determines is appropriate; or

   Inserted: (B) less than 1.5 percent per year.

   Original wording

   Beginning on page 447, strike line 10 and all that follows through page 460, line 18, and insert the following:

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As printed