2. Farmer's Affidavit (CROP Form 3). This form is signed by the Farmer(s) and shows the assets and liabilities based on a current personal financial statement. This is used to calculate the debt-to-asset ratio which must be 40% or greater.
Agricultural Universal Note (similar to WBA 755 dated 6/02 or more current); or
PCA Supplementary Loan Agreement if the Lender is a PCA or FCS (PCA equivalent 15928 (B) 15935 (B) or more current)
· $ 60,000 maximum for 2005 |
· $ 2,000 minimum |
The CROP loan must have a maturity date no later than March 31 of the year following origination. WHEDA automatically extends unpaid loans to June 30, but the Note must have a maturity date no later than March 31.
The maximum interest rate for CROP loans is Prime + 1%, using the lowest Prime lending rate as quoted in the most recent Midwest Edition of The Wall Street Journal as the interest rate index. The rate is a fixed interest rate set on the date of the Note. Earnings to the Lender from any fees and interest costs paid by the Farmer cannot exceed the maximum rate.
The Lender is encouraged to review the Farmer's financial needs on a case-by-case basis and to set the interest rate accordingly. The interest rate set by the Lender can be less than, but not more than, the maximum rate set by WHEDA.
When possible, the Note should require a monthly or quarterly payment. When circumstances do not allow for this, a lump sum payment will be accepted. The payment schedule should be tailored to accommodate the specific type of farming operation.
Without formal establishment of a payment schedule, the Lender has no enforceable right until the due date to begin default proceedings should the Farmer stop making payments toward the CROP loan.
The maximum delinquency interest rate that can be charged to the Farmer is 12%. This includes loans in forbearance.
The CROP loan may be prepaid in full or in part at any time without penalty.
Farm Security Agreement (similar to WBA 711 dated 5/01 or more current); or
Production Credit Association Security Agreement if Lender is a PCA or FCS (15150 (A) or more current)
The Security Agreement must meet the following requirements:
· CROP loan must be secured in accordance with normal, prudent agricultural lending practices distinct from WHEDA's guarantee;
· The Agreement must portray a perfected security interest in the agricultural commodity to be financed with the CROP loan;
· Sufficient collateral must be in place to cover the value of the CROP loan; and
· Security documents must contain appropriate environmental law language.
5. UCC-1 Financing Statement(s)
The UCC-1 Financing Statement(s) must meet the following requirements:
· UCC-1 financing statements must be filed with Department of Financial Institutions (DFI) except for filings on minerals, timber to be cut and fixture filings which are filed in the office of the Register of Deeds where a mortgage would be filed on related real property;
· UCC-1 must not be more than five years old including the current year the CROP loan is originated;
· If an extension of the original UCC-1 has been issued, the original UCC-1's filing information and date must be referenced on the extension; and
· Lender must ensure that all documents necessary to protect such security interest are perfected.
For more information, consult your legal counsel or the Wisconsin Banker's Association.
