S 3936
USDA Loan Modernization Act
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Bill overview
The USDA Loan Modernization Act amends the Consolidated Farm and Rural Development Act to broaden eligibility for USDA loans. Specifically, it raises the ownership stake required for loan applicants to at least 50% to include individuals or entities operating farms with at least 50% interest. The bill also clarifies rules for operating-only entities and embedded entities, ensuring that qualified operators hold a majority of ownership interests in these arrangements to qualify for loans.
Key provisions
- Increases the required ownership stake for loan applicants to at least 50%.
- Defines ‘qualified operators’ as those acceptable to the Secretary.
- Allows operating-only entities to qualify for loans if a qualified operator owns at least 50% of the applicant.
- Addresses eligibility for embedded entities, requiring at least 75% of ownership to be held by qualified operators.
- Modifies eligibility requirements for emergency loans to align with the provisions regarding ownership stake.
Who is affected
- Farmers
- Agricultural Businesses
- USDA Loan Applicants
- Rural Communities
- Agricultural Landowners
Notable changes
- Raises the minimum ownership requirement for loan eligibility.
- Clarifies the definition of ‘qualified operator’.
- Provides specific rules for operating-only entities and embedded entities to qualify for loans.
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Primary sponsor
Cosponsor
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119th CONGRESS — 2d Session
S. 3936
IN THE SENATE OF THE UNITED STATES
A BILL
To amend the Consolidated Farm and Rural Development Act to expand eligibility for guaranteed and direct loans to individuals or entity members that hold at least a 50 percent interest and that are or will become qualified operators of the farm real estate acquired, improved, or supported with farm ownership, operating, or emergency loans, and for other purposes.
This Act may be cited as the USDA Loan Modernization Act
.
Section 302(a) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1922(a)) is amended—
in paragraph (1)—
in the matter preceding subparagraph (A), by striking a majority
and inserting at least a 50 percent
; and
a majorityand inserting
at least a 50 percent; and
in paragraph (2), by striking subparagraphs (A) and (B) and inserting the following:
Qualified operators, as defined by the Secretary, shall be considered to meet the operator requirement of paragraph (1).
An applicant that is or will become only the operator of farm real estate acquired, improved, or supported with funds under this subtitle shall be considered to meet the owner-operator requirements of paragraph (1) if 1 or more of the individuals who is an owner of the farm real estate owns at least 50 percent (or such other percentage as the Secretary determines is appropriate) of the applicant.
An entity that is an owner-operator described in paragraph (1), or an operator described in subparagraph (B) of this paragraph that is owned, in whole or in part, by 1 or more other entities, shall be considered to meet the direct ownership requirement imposed under paragraph (1) if at least 75 percent of the total ownership interests of the embedded entity, or of the other entities, is owned, directly or indirectly, by qualified operators of the farm acquired, improved, or supported with funds under this subtitle.
Section 311(a) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1941(a)) is amended—
in paragraph (1)—
in the matter preceding subparagraph (A), by striking a majority
and inserting at least a 50 percent
; and
a majorityand inserting
at least a 50 percent; and
Qualified operators, as defined by the Secretary, shall be considered to meet the operator requirement of paragraph (1).
Section 321 of the Consolidated Farm and Rural Development Act (7 U.S.C. 1961) is amended—
in subsection (a)—
in the first sentence—
by striking (A)
and inserting (i)
;
by striking (B)
and inserting (ii)
;
by striking (1)
and inserting (A)
;
by striking (2)
and inserting (B)
; and
by striking a majority
each place it appears and inserting at least a 50 percent
;
in the second sentence, by striking this subsection
and inserting this paragraph
;
by striking the fifth sentence; and
by adding at the end the following:
Qualified operators, as defined by the Secretary, shall be considered to meet the operator requirement of paragraph (1).
An applicant that is or will become only the operator of farm real estate acquired, improved, or supported with funds under this subtitle shall be considered to meet the owner-operator requirements of paragraph (1) if 1 or more of the individuals who is an owner of the real estate owns at least 50 percent (or such other percentage as the Secretary determines is appropriate) of the applicant.
An entity that is an owner-operator described in paragraph (1), or an operator described in subparagraph (B) of this paragraph that is owned, in whole or in part, by 1 or more other entities, shall be considered to meet the direct ownership requirement imposed under paragraph (1) if at least 75 percent of the total ownership interests of the embedded entity, or of the other entities, is owned, directly or indirectly, by qualified operators of the farm acquired, improved, or supported with funds under this subtitle.
by striking the section designation and all that follows through shall make and insure
in the first sentence of the matter preceding paragraph (2) of subsection (a) and inserting the following:
The Secretary shall make and insure