AB 675

The Wisconsin Housing and Economic Development Authority (WHEDA)

administers a number of loan guarantee programs. This bill makes various changes

to several of the agricultural loan guarantee programs administered by WHEDA.

Agricultural production loan guarantee program

WHEDA operates a program under which it provides guarantees for certain

agricultural production loans (agricultural production loan guarantee program).

Under the agricultural production loan guarantee program, WHEDA is prohibited

from guaranteeing a loan if the total outstanding principal of all loans to a borrower

under the program is more than a maximum amount set annually by WHEDA that

is not more than $150,000. Under the bill, WHEDA is prohibited from guaranteeing

a loan if the total guarantee, rather than the total outstanding principal, of all loans

to the borrower is more than $250,000. This limitation also applies to a guaranteed

loan that is used to refinance a loan guaranteed under the agricultural production

loan guarantee program. The bill also allows WHEDA to extend an agricultural

production loan guarantee beyond the original term of the guaranteed loan if the loan

is part of a loan workout agreement.

Under current law, a farmer is eligible for a loan guarantee under the

agricultural production loan guarantee program if the farmer's debts total at least

40 percent of the farmer's assets. This bill restricts the farmer's debts and assets that

are compared to only those that are related to the agricultural production that is the

subject of the loan. Current law also requires that to be eligible for a guaranteed loan,

it must be reasonably likely that, if the farmer receives a guaranteed loan, the farmer

will not be subject to voluntary or involuntary liquidation before April 1 of the

following calendar year. This bill changes the April 1 date to the end of the loan term.

Under current law, WHEDA is required under the agricultural production loan

guarantee program to guarantee repayment of 80 or 90 percent of the principal of an

eligible loan, depending on the total principal of the loan. Additionally, under

current law, when commercial interest rates exceed a certain amount, WHEDA must

make interest reduction payments equal to 2 percent of the principal amount of a

guaranteed loan to participating lenders. This bill makes both of these requirements

permissive rather than mandatory. Additionally, the bill changes the amount of a

guarantee under the program to no more than 90 percent, regardless of the principal

amount of a loan, and changes the amount of the interest reduction payments to an

amount not to exceed 2 percent of the principal amount of the guaranteed loan.

Farm assets reinvestment management loan guarantee program

WHEDA operates the farm assets reinvestment management loan guarantee

program (FARM program) under which WHEDA guarantees loans to farmers for the

acquisition of agricultural assets or the cost of improvements to facilities or land.

Under current law, a farmer is eligible for a loan under the FARM program if, among

other things, the person is currently operating farm premises or if the person intends