Bill Text: IL HB0753 | 2017-2018 | 100th General Assembly | Introduced

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Bill Title: Amends the Illinois Finance Authority Act. In Sections concerning State guarantees for loans to farmers, provides that the total amount of the guarantees shall not exceed $2,000,000 per farmer (instead of $500,000). Provides that guarantees may be made if the farmer's net worth does not exceed $2,000,000 (instead of $500,000). In a Section concerning guarantees for existing debt, provides that the Illinois Agricultural Loan Guarantee Fund shall guarantee receipt of payment of 90% (instead of 85%) of the principal and interest owed on the State Guarantee Loan by the farmer to the guarantee holder. Effective immediately.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Failed) 2019-01-08 - Session Sine Die [HB0753 Detail]

Download: Illinois-2017-HB0753-Introduced.html

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100TH GENERAL ASSEMBLY State of Illinois 2017 and 2018 HB0753 Introduced , by Rep. C.D. Davidsmeyer SYNOPSIS AS INTRODUCED:
20 ILCS 3501/830-20
20 ILCS 3501/830-30
20 ILCS 3501/830-35
20 ILCS 3501/830-45
Amends the Illinois Finance Authority Act. In Sections concerning State guarantees for loans to farmers, provides that the total amount of the guarantees shall not exceed $2,000,000 per farmer (instead of $500,000). Provides that guarantees may be made if the farmer's net worth does not exceed $2,000,000 (instead of $500,000). In a Section concerning guarantees for existing debt, provides that the Illinois Agricultural Loan Guarantee Fund shall guarantee receipt of payment of 90% (instead of 85%) of the principal and interest owed on the State Guarantee Loan by the farmer to the guarantee holder. Effective immediately.
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FISCAL NOTE ACT MAY APPLY
A BILL FOR
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AN ACT concerning finance.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Finance Authority Act is amended by
changing Sections 830-20, 830-30, 830-35, and 830-45 as
follows:
(20 ILCS 3501/830-20)
Sec. 830-20. The Authority may not pass a resolution
authorizing the issuance of any notes or bonds in excess of
$2,000,000 $450,000 for any one agricultural real estate
borrower. In any calendar year after 2007, the $450,000 amount
shall be increased by an amount equal to such dollar amount
multiplied by the inflation percentage determined under
Section 305(c) of the federal Consolidated Farm and Rural
Development Act (7 U.S.C. 1925) as of June 18, 2008. Any
increase determined under the preceding sentence shall be
rounded to the nearest multiple of $100. No proceeds from any
bonds issued by the Authority shall be loaned to any natural
person who has a net worth in excess of $2,000,000 $500,000 for
the purchase of new depreciable agricultural property or to any
agribusiness that, including all affiliates and subsidiaries,
has more than 100 employees and a gross income exceeding
$2,000,000 for the preceding calendar year; provided, however,

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that the employee size and gross income limitations shall not
apply to any loans to agribusinesses for research and
development purposes, and provided further that the Authority
shall retain the power to waive such limitations for any
agribusiness that, at the time of application, does not operate
a facility within this State.
(Source: P.A. 96-531, eff. 8-14-09.)
(20 ILCS 3501/830-30)
Sec. 830-30. State Guarantees for existing debt.
(a) The Authority is authorized to issue State Guarantees
for farmers' existing debts held by a lender. For the purposes
of this Section, a farmer shall be a resident of Illinois, who
is a principal operator of a farm or land, at least 50% of
whose annual gross income is derived from farming and whose
debt to asset ratio shall not be less than 40%, except in those
cases where the applicant has previously used the guarantee
program there shall be no debt to asset ratio or income
restriction. For the purposes of this Section, debt to asset
ratio shall mean the current outstanding liabilities of the
farmer divided by the current outstanding assets of the farmer.
The Authority shall establish the maximum permissible debt to
asset ratio based on criteria established by the Authority.
Lenders shall apply for the State Guarantees on forms provided
by the Authority and certify that the application and any other
documents submitted are true and correct. The lender or

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borrower, or both in combination, shall pay an administrative
fee as determined by the Authority. The applicant shall be
responsible for paying any fees or charges involved in
recording mortgages, releases, financing statements, insurance
for secondary market issues and any other similar fees or
charges as the Authority may require. The application shall at
a minimum contain the farmer's name, address, present credit
and financial information, including cash flow statements,
financial statements, balance sheets, and any other
information pertinent to the application, and the collateral to
be used to secure the State Guarantee. In addition, the lender
must agree to bring the farmer's debt to a current status at
the time the State Guarantee is provided and must also agree to
charge a fixed or adjustable interest rate which the Authority
determines to be below the market rate of interest generally
available to the borrower. If both the lender and applicant
agree, the interest rate on the State Guarantee Loan can be
converted to a fixed interest rate at any time during the term
of the loan. Any State Guarantees provided under this Section
(i) shall not exceed $2,000,000 $500,000 per farmer, (ii) shall
be set up on a payment schedule not to exceed 30 years, and
shall be no longer than 30 years in duration, and (iii) shall
be subject to an annual review and renewal by the lender and
the Authority; provided that only one such State Guarantee
shall be outstanding per farmer at any one time. No State
Guarantee shall be revoked by the Authority without a 90-day

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notice, in writing, to all parties. In those cases where the
borrower has not previously used the guarantee program, the
lender shall not call due any loan during the first 3 years for
any reason except for lack of performance or insufficient
collateral. The lender can review and withdraw or continue with
the State Guarantee on an annual basis after the first 3 years
of the loan, provided a 90-day notice, in writing, to all
parties has been given.
(b) The Authority shall provide or renew a State Guarantee
to a lender if:
(i) A fee equal to 25 basis points on the loan is paid
to the Authority on an annual basis by the lender.
(ii) The application provides collateral acceptable to
the Authority that is at least equal to the State's portion
of the Guarantee to be provided.
(iii) The lender assumes all responsibility and costs
for pursuing legal action on collecting any loan that is
delinquent or in default.
(iv) The lender is responsible for the first 10% 15% of
the outstanding principal of the note for which the State
Guarantee has been applied.
(c) There is hereby created outside of the State treasury a
special fund to be known as the Illinois Agricultural Loan
Guarantee Fund. The State Treasurer shall be custodian of this
Fund. Any amounts in the Illinois Agricultural Loan Guarantee
Fund not currently needed to meet the obligations of the Fund

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shall be invested as provided by law, and all interest earned
from these investments shall be deposited into the Fund until
the Fund reaches the maximum amount authorized in this Act;
thereafter, interest earned shall be deposited into the General
Revenue Fund. After September 1, 1989, annual investment
earnings equal to 1.5% of the Fund shall remain in the Fund to
be used for the purposes established in Section 830-40 of this
Act. The Authority is authorized to transfer to the Fund such
amounts as are necessary to satisfy claims during the duration
of the State Guarantee program to secure State Guarantees
issued under this Section, provided that amounts to be paid
from the Industrial Project Insurance Fund created under
Article 805 of this Act may be paid by the Authority directly
to satisfy claims and need not be deposited first into the
Illinois Agricultural Loan Guarantee Fund. If for any reason
the General Assembly fails to make an appropriation sufficient
to meet these obligations, this Act shall constitute an
irrevocable and continuing appropriation of an amount
necessary to secure guarantees as defaults occur and the
irrevocable and continuing authority for, and direction to, the
State Treasurer and the Comptroller to make the necessary
transfers to the Illinois Agricultural Loan Guarantee Fund, as
directed by the Governor, out of the General Revenue Fund.
Within 30 days after November 15, 1985, the Authority may
transfer up to $7,000,000 from available appropriations into
the Illinois Agricultural Loan Guarantee Fund for the purposes

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of this Act. Thereafter, the Authority may transfer additional
amounts into the Illinois Agricultural Loan Guarantee Fund to
secure guarantees for defaults as defaults occur. In the event
of default by the farmer, the lender shall be entitled to, and
the Authority shall direct payment on, the State Guarantee
after 90 days of delinquency. All payments by the Authority to
satisfy claims against the State Guarantee shall be made, in
whole or in part, from any of the following funds in such order
and in such amounts as the Authority shall determine: (1) the
Industrial Project Insurance Fund created under Article 805 of
this Act (if the Authority exercises its discretion under
subsection (j) of Section 805-20); (2) the Illinois
Agricultural Loan Guarantee Fund; or (3) the Illinois Farmer
and Agribusiness Loan Guarantee Fund. The Illinois
Agricultural Loan Guarantee Fund shall guarantee receipt of
payment of 90% the 85% of the principal and interest owed on
the State Guarantee Loan by the farmer to the guarantee holder,
provided that payments by the Authority to satisfy claims
against the State Guarantee shall be made in accordance with
the preceding sentence. It shall be the responsibility of the
lender to proceed with the collecting and disposing of
collateral on the State Guarantee under this Section, Section
830-35, Section 830-45, Section 830-50, Section 830-55, or
Article 835 within 14 months of the time the State Guarantee is
declared delinquent; provided, however, that the lender shall
not collect or dispose of collateral on the State Guarantee

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without the express written prior approval of the Authority. If
the lender does not dispose of the collateral within 14 months,
the lender shall be liable to repay to the State interest on
the State Guarantee equal to the same rate which the lender
charges on the State Guarantee; provided, however, that the
Authority may extend the 14-month period for a lender in the
case of bankruptcy or extenuating circumstances. The Fund from
which a payment is made shall be reimbursed for any amounts
paid from that Fund under this Section, Section 830-35, Section
830-45, Section 830-50, Section 830-55, or Article 835 upon
liquidation of the collateral. The Authority, by resolution of
the Board, may borrow sums from the Fund and provide for
repayment as soon as may be practical upon receipt of payments
of principal and interest by a farmer. Money may be borrowed
from the Fund by the Authority for the sole purpose of paying
certain interest costs for farmers associated with selling a
loan subject to a State Guarantee in a secondary market as may
be deemed reasonable and necessary by the Authority.
(d) Notwithstanding the provisions of this Section 830-30
with respect to the farmers and lenders who may obtain State
Guarantees, the Authority may promulgate rules establishing
the eligibility of farmers and lenders to participate in the
State guarantee program and the terms, standards, and
procedures that will apply, when the Authority finds that
emergency conditions in Illinois agriculture have created the
need for State Guarantees pursuant to terms, standards, and

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procedures other than those specified in this Section.
(Source: P.A. 99-509, eff. 6-24-16.)
(20 ILCS 3501/830-35)
Sec. 830-35. State Guarantees for loans to farmers and
agribusiness; eligibility.
(a) The Authority is authorized to issue State Guarantees
to lenders for loans to eligible farmers and agribusinesses for
purposes set forth in this Section. For purposes of this
Section, an eligible farmer shall be a resident of Illinois (i)
who is principal operator of a farm or land, at least 50% of
whose annual gross income is derived from farming, (ii) whose
annual total sales of agricultural products, commodities, or
livestock exceeds $20,000, and (iii) whose net worth does not
exceed $2,000,000 $500,000. An eligible agribusiness shall be
that as defined in Section 801-10 of this Act. The Authority
may approve applications by farmers and agribusinesses that
promote diversification of the farm economy of this State
through the growth and development of new crops or livestock
not customarily grown or produced in this State or that
emphasize a vertical integration of grain or livestock produced
or raised in this State into a finished agricultural product
for consumption or use. "New crops or livestock not customarily
grown or produced in this State" shall not include corn,
soybeans, wheat, swine, or beef or dairy cattle. "Vertical
integration of grain or livestock produced or raised in this

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State" shall include any new or existing grain or livestock
grown or produced in this State. Lenders shall apply for the
State Guarantees on forms provided by the Authority, certify
that the application and any other documents submitted are true
and correct, and pay an administrative fee as determined by the
Authority. The applicant shall be responsible for paying any
fees or charges involved in recording mortgages, releases,
financing statements, insurance for secondary market issues
and any other similar fees or charges as the Authority may
require. The application shall at a minimum contain the
farmer's or agribusiness' name, address, present credit and
financial information, including cash flow statements,
financial statements, balance sheets, and any other
information pertinent to the application, and the collateral to
be used to secure the State Guarantee. In addition, the lender
must agree to charge an interest rate, which may vary, on the
loan that the Authority determines to be below the market rate
of interest generally available to the borrower. If both the
lender and applicant agree, the interest rate on the State
Guarantee Loan can be converted to a fixed interest rate at any
time during the term of the loan. Any State Guarantees provided
under this Section (i) shall not exceed $2,000,000 $500,000 per
farmer or an amount as determined by the Authority on a
case-by-case basis for an agribusiness, (ii) shall not exceed a
term of 15 years, and (iii) shall be subject to an annual
review and renewal by the lender and the Authority; provided

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that only one such State Guarantee shall be made per farmer or
agribusiness, except that additional State Guarantees may be
made for purposes of expansion of projects financed in part by
a previously issued State Guarantee. No State Guarantee shall
be revoked by the Authority without a 90-day notice, in
writing, to all parties. The lender shall not call due any loan
for any reason except for lack of performance, insufficient
collateral, or maturity. A lender may review and withdraw or
continue with a State Guarantee on an annual basis after the
first 5 years following closing of the loan application if the
loan contract provides for an interest rate that shall not
vary. A lender shall not withdraw a State Guarantee if the loan
contract provides for an interest rate that may vary, except
for reasons set forth herein.
(b) The Authority shall provide or renew a State Guarantee
to a lender if:
(i) A fee equal to 25 basis points on the loan is paid
to the Authority on an annual basis by the lender.
(ii) The application provides collateral acceptable to
the Authority that is at least equal to the State's portion
of the Guarantee to be provided.
(iii) The lender assumes all responsibility and costs
for pursuing legal action on collecting any loan that is
delinquent or in default.
(iv) The lender is responsible for the first 10% 15% of
the outstanding principal of the note for which the State

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Guarantee has been applied.
(c) There is hereby created outside of the State treasury a
special fund to be known as the Illinois Farmer and
Agribusiness Loan Guarantee Fund. The State Treasurer shall be
custodian of this Fund. Any amounts in the Fund not currently
needed to meet the obligations of the Fund shall be invested as
provided by law, and all interest earned from these investments
shall be deposited into the Fund until the Fund reaches the
maximum amounts authorized in this Act; thereafter, interest
earned shall be deposited into the General Revenue Fund. After
September 1, 1989, annual investment earnings equal to 1.5% of
the Fund shall remain in the Fund to be used for the purposes
established in Section 830-40 of this Act. The Authority is
authorized to transfer such amounts as are necessary to satisfy
claims from available appropriations and from fund balances of
the Farm Emergency Assistance Fund as of June 30 of each year
to the Illinois Farmer and Agribusiness Loan Guarantee Fund to
secure State Guarantees issued under this Section, Sections
830-30, 830-45, 830-50, and 830-55, and Article 835 of this
Act. Amounts to be paid from the Industrial Project Insurance
Fund created under Article 805 of this Act may be paid by the
Authority directly to satisfy claims and need not be deposited
first into the Illinois Farmer and Agribusiness Loan Guarantee
Fund. If for any reason the General Assembly fails to make an
appropriation sufficient to meet these obligations, this Act
shall constitute an irrevocable and continuing appropriation

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of an amount necessary to secure guarantees as defaults occur
and the irrevocable and continuing authority for, and direction
to, the State Treasurer and the Comptroller to make the
necessary transfers to the Illinois Farmer and Agribusiness
Loan Guarantee Fund, as directed by the Governor, out of the
General Revenue Fund. In the event of default by the borrower
on State Guarantee Loans under this Section, Section 830-45,
Section 830-50, or Section 830-55, the lender shall be entitled
to, and the Authority shall direct payment on, the State
Guarantee after 90 days of delinquency. All payments by the
Authority to satisfy claims against the State Guarantee shall
be made, in whole or in part, from any of the following funds
in such order and in such amounts as the Authority shall
determine: (1) the Industrial Project Insurance Fund created
under Article 805 of this Act (if the Authority exercises its
discretion under subsection (j) of Section 805-20); (2) the
Illinois Farmer and Agribusiness Loan Guarantee Fund; or (3)
the Illinois Farmer and Agribusiness Loan Guarantee Fund. It
shall be the responsibility of the lender to proceed with the
collecting and disposing of collateral on the State Guarantee
under this Section, Section 830-45, Section 830-50, or Section
830-55 within 14 months of the time the State Guarantee is
declared delinquent. If the lender does not dispose of the
collateral within 14 months, the lender shall be liable to
repay to the State interest on the State Guarantee equal to the
same rate that the lender charges on the State Guarantee,

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provided that the Authority shall have the authority to extend
the 14-month period for a lender in the case of bankruptcy or
extenuating circumstances. The Fund shall be reimbursed for any
amounts paid under this Section, Section 830-30, Section
830-45, Section 830-50, Section 830-55, or Article 835 upon
liquidation of the collateral. The Authority, by resolution of
the Board, may borrow sums from the Fund and provide for
repayment as soon as may be practical upon receipt of payments
of principal and interest by a borrower on State Guarantee
Loans under this Section, Section 830-30, Section 830-45,
Section 830-50, Section 830-55, or Article 835. Money may be
borrowed from the Fund by the Authority for the sole purpose of
paying certain interest costs for borrowers associated with
selling a loan subject to a State Guarantee under this Section,
Section 830-30, Section 830-45, Section 830-50, Section
830-55, or Article 835 in a secondary market as may be deemed
reasonable and necessary by the Authority.
(d) Notwithstanding the provisions of this Section 830-35
with respect to the farmers, agribusinesses, and lenders who
may obtain State Guarantees, the Authority may promulgate rules
establishing the eligibility of farmers, agribusinesses, and
lenders to participate in the State Guarantee program and the
terms, standards, and procedures that will apply, when the
Authority finds that emergency conditions in Illinois
agriculture have created the need for State Guarantees pursuant
to terms, standards, and procedures other than those specified

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in this Section.
(Source: P.A. 99-509, eff. 6-24-16.)
(20 ILCS 3501/830-45)
Sec. 830-45. Young Farmer Loan Guarantee Program.
(a) The Authority is authorized to issue State Guarantees
to lenders for loans to finance or refinance debts of young
farmers. For the purposes of this Section, a young farmer is a
resident of Illinois who is at least 18 years of age and who is
a principal operator of a farm or land, who derives at least
50% of annual gross income from farming, whose net worth is not
less than $10,000 and whose debt to asset ratio is not less
than 40%. For the purposes of this Section, debt to asset ratio
means current outstanding liabilities, including any debt to be
financed or refinanced under this Section 830-45, divided by
current outstanding assets. The Authority shall establish the
maximum permissible debt to asset ratio based on criteria
established by the Authority. Lenders shall apply for the State
Guarantees on forms provided by the Authority and certify that
the application and any other documents submitted are true and
correct. The lender or borrower, or both in combination, shall
pay an administrative fee as determined by the Authority. The
applicant shall be responsible for paying any fee or charge
involved in recording mortgages, releases, financing
statements, insurance for secondary market issues, and any
other similar fee or charge that the Authority may require. The

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application shall at a minimum contain the young farmer's name,
address, present credit and financial information, including
cash flow statements, financial statements, balance sheets,
and any other information pertinent to the application, and the
collateral to be used to secure the State Guarantee. In
addition, the borrower must certify to the Authority that, at
the time the State Guarantee is provided, the borrower will not
be delinquent in the repayment of any debt. The lender must
agree to charge a fixed or adjustable interest rate that the
Authority determines to be below the market rate of interest
generally available to the borrower. If both the lender and
applicant agree, the interest rate on the State guaranteed loan
can be converted to a fixed interest rate at any time during
the term of the loan. State Guarantees provided under this
Section (i) shall not exceed $2,000,000 $500,000 per young
farmer, (ii) shall be set up on a payment schedule not to
exceed 30 years, but shall be no longer than 15 years in
duration, and (iii) shall be subject to an annual review and
renewal by the lender and the Authority. A young farmer may use
this program more than once provided the aggregate principal
amount of State Guarantees under this Section to that young
farmer does not exceed $2,000,000 $500,000. No State Guarantee
shall be revoked by the Authority without a 90-day notice, in
writing, to all parties.
(b) The Authority shall provide or renew a State Guarantee
to a lender if:

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(i) The lender pays a fee equal to 25 basis points on
the loan to the Authority on an annual basis.
(ii) The application provides collateral acceptable to
the Authority that is at least equal to the State
Guarantee.
(iii) The lender assumes all responsibility and costs
for pursuing legal action on collecting any loan that is
delinquent or in default.
(iv) The lender is at risk for the first 10% 15% of the
outstanding principal of the note for which the State
Guarantee is provided.
(c) The Illinois Agricultural Loan Guarantee Fund, the
Illinois Farmer and Agribusiness Loan Guarantee Fund, and the
Industrial Project Insurance Fund may be used to secure State
Guarantees issued under this Section as provided in Section
830-30, Section 830-35, and subsection (j) of Section 805-20,
respectively. All payments by the Authority to satisfy claims
against the State Guarantee shall be made, in whole or in part,
from any of the following funds in such order and in such
amounts as the Authority shall determine: (1) the Industrial
Project Insurance Fund (if the Authority exercises its
discretion under subsection (j) of Section 805-20); (2) the
Illinois Agricultural Loan Guarantee Fund; or (3) the Illinois
Farmer and Agribusiness Loan Guarantee Fund.
(d) Notwithstanding the provisions of this Section 830-45
with respect to the young farmers and lenders who may obtain

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State Guarantees, the Authority may promulgate rules
establishing the eligibility of young farmers and lenders to
participate in the State Guarantee program and the terms,
standards, and procedures that will apply, when the Authority
finds that emergency conditions in Illinois agriculture have
created the need for State Guarantees pursuant to terms,
standards, and procedures other than those specified in this
Section.
(Source: P.A. 99-509, eff. 6-24-16.)
Section 99. Effective date. This Act takes effect upon
becoming law.