(a) Loan approval.

1. (1) The Agency will approve a loan only if it determines that:

   1. (i) The applicant's farm operating plan reflects a feasible plan, which includes repayment of the proposed loan and demonstrates that all other credit needs can be met;
   2. (ii) The proposed use of loan funds is authorized for the type of loan requested;
   3. (iii) The applicant has been determined eligible for the type of loan requested;
   4. (iv) All security requirements for the type of loan requested have been, or will be met before the loan is closed;
   5. (v) The applicant's total indebtedness to the Agency, including the proposed loan, will not exceed the maximum limits established in § 761.8 of this chapter;
   6. (vi) There have been no significant changes in the farm operating plan or the applicant's financial condition since the time the Agency received a complete application; and
   7. (vii) All other pertinent requirements have been, or will be met before the loan is closed.
2. (2) The Agency will place conditions upon loan approval it determines necessary to protect its interest and maximize the applicant's potential for success.

(b) Loan denial. The Agency will not approve a loan if it determines that:

1. (1) The applicant's farm operating plan does not reflect a feasible plan;
2. (2) The proposed use of loan funds is not authorized for the type of loan requested;
3. (3) The applicant does not meet the eligibility requirements for the type of loan requested;
4. (4) There is inadequate security for the type of loan requested;
5. (5) Approval of the loan would cause the applicant's total indebtedness to the Agency to exceed the maximum limits established in § 761.8 of this chapter;
6. (6) The applicant's circumstances may not permit continuous operation and management of the farm; or
7. (7) The applicant, the farming operation, or other circumstances surrounding the loan are inconsistent with the authorizing statutes, other Federal laws, or Federal credit policies.

(c) Overturn of an Agency decision by appeal. If an FLP loan denial is overturned on administrative appeal, the Agency will not automatically approve the loan. Unless prohibited by the final appeal determination or otherwise advised by the Office of General Counsel, the Agency will:

1. (1) Request current financial information from the applicant as necessary to determine whether any changes in the applicant's financial condition or agricultural conditions which occurred after the Agency's adverse decision was made will adversely affect the applicant's farming operation;

2. (2) Approve a loan for crop production:

   1. (i) Only if the Agency can determine that the applicant will be able to produce a crop in the production cycle for which the loan is requested; or
   2. (ii) For the next production cycle, upon review of current financial data and a farm operating plan for the next production cycle, if the Agency determines the loan can be repaid. The new farm operating plan must reflect any financial issues resolved in the appeal.
3. (3) Determine whether the applicant's farm operating plan, as modified based on the appeal decision, reflects a feasible plan, which includes repayment of the proposed loan and demonstrates that all other credit needs can be met.