28-248 C.M.R. ch. 101
Summary: The purpose of these rules is to implement PL 1986, c. 816 "An Act to Allow Investments of State Funds linked to Agricultural Loans", which amends 5 M.R.S.A. Section 135 to allow the Treasurer of the State to invest up to $4,000,000.00 of state funds in financial institutions for terms not to exceed one year, at a rate of return not more than 2 percent per year below the rate obtainable had the funds been otherwise invested. The Treasurer may make such investments in support of a loan or loans made by financial institutions to agricultural enterprises for agricultural purposes, provided such loans are made at interest institutions resulting from the reduced rate paid on the investment of State funds.
I. Definitions.
A. Agricultural enterprises. "Agricultural enterprise" means a business which has its principal source of revenue the cultivation of the soil, the producing of crops or the raising of livestock, or their by-products.
A-1. Entrant to farming. "Entrant to farming" means a person operating an agricultural enterprise who (1) is less than 35 years old, or (2) has less than six years of experience operating an agricultural enterprise as a sole proprietor or majority shareholder or partner with a controlling interest, or (3) has less than $100,000 in assets exclusive of personal residence and in the most recent fiscal year, had less than $40,000 in agricultural income (or) means a corporation or partnership in which an owner of an agricultural enterprise who meets one of the previous three criteria has an ownership interest of at least 20%.
B. Loan for agricultural purposes. "Loan for agricultural purposes" means a loan made to an agricultural enterprise for the purposes of obtaining production inputs, labor, veterinarian services and similar elements necessary to the operation of the enterprise. Such loans are also known as "operating loans."
C. Participation amount. "Participation amount" means that portion of the principal of a loan made under this rule, which is supported by a related investment of State funds, where the loan principal is greater than the supporting investment.
D. Qualified loan. "Qualified loan" means a loan made by a financial institution, which meets the criteria established by 5 M.R.S.A Section 135 and this rule, for which the Treasurer may make a supporting investment equal to the loan principal or to the participation amount.
E. Financial institution. "Financial institution" means any bank, trust company,
national association, savings bank, savings and loan association, federal savings and loan association, Agricultural Credit Association, or any state or federal agency which provides or may provide loans to agricultural enterprises for agricultural purposes.
F. State funds. "State funds" means only the $4,000,000 authorized for investment at a reduced rate of return under this program.
G. Authority. "Authority" means the Finance Authority of Maine.
II. Allocation of funds.
The Treasurer shall allocate the total amount of the funds available for investment under 5 M.R.S.A. Section 135 to the counties of the State on the basis of each county's percentage of the total State cash sales of agricultural products as reported in the most recent United States Census of Agriculture. Until April 1 of each year, the funds so allocated to each county shall be available for investment only in support of qualified loans to agricultural enterprises located in that county. After April 1 of each year, the Treasurer may invest any remaining funds to support a qualified loan or loans without regard to the county of location of the agricultural enterprises to which the loan is made.
III. Eligibility.
An investment under this rule may be made only to support a loan for agricultural purposes to the owner of an agricultural enterprise who meets one of the following criteria:
A. In the prior year, obtained a loan or loans for agricultural purposes either under the Linked Investment Program or from the Farmer's Home Administration, or
B. In the most recent fiscal year incurred accrued interest expense on loans for agricultural purposes equal to or in excess of 13% of total annual cash farm operating expenditures, or
C. Is an entrant to farming.
Until April 1 of each year, funds shall be available for investment only in support of loans to agricultural enterprises eligible under Section III(a) and (b). After April 1 of each year, the Treasurer may invest any remaining funds to support loans to entrants to farming.
Participation in the Linked Investment Program by the owner of an agricultural enterprise is limited to two investment periods. However, if the $4,000,000 authorization is not fully utilized in any investment period by other eligible participants, an entrant to farming may participate in the Program for up to two additional investment periods.
A financial institution may submit an application to the Treasurer to receive an investment or investments of State funds under 5 M.R.S.A. Section 135 to support a qualified loan or loans. The application shall be on forms provided or approved by the Treasurer and shall identify the financial institution and, for each loan, shall
Where the Treasurer determines that the application is complete and that the criteria are met, he may approve the loan to be a qualified loan and may make the supporting investment of State funds in the financial institution. The investment shall be made for no longer than a one year term and at an interest rate which enables the financial institution to make the loan or loans included in its application and approved by the Treasurer at the interest rate specified in the application. In no event shall the investment be made at a rate less than 0 percent or at a rate more than 2 percent per year below the rate of return
otherwise obtainable had the State funds been invested other than under this rule, as determined by the Treasurer.
No chartered financial institution or any chartered financial institution owned together with one or more other chartered financial institutions by any parent entity authorized to do business in the State may receive more than $1 million of the total amount of State funds authorized by law for investment under 5 M.R.S.A. Section 135 unless the Treasurer determines, in consideration of extraordinary financial need in a particular geographic area of the State related to difficulty in obtaining agricultural financing, that this limitation should be waived. In any event, the limitation on investments by financial institution shall be waived after April 1 of each year.
No single qualified loan made under this rule may be supported by a related investment of State funds in an amount greater than $200,000, nor may the total of all qualified loans made under this rule to a single agricultural enterprise be supported by an investment or investments in a total amount greater than $200,000.
No loan made to an officer, director or shareholder of a financial institution may be a qualified loan, except for loans to shareholders of Agricultural Credit Associations.
The State Treasurer is not a lender with respect to any loan made under 5 M.R.S.A. Section 135 and this rule and the investment of State funds in a financial institution under this rule does not represent any kind of guarantee of or security for repayment of a loan in the event of default. For any loan made under 5 M.R.S.A. Section 135 and this rule, the financial institution is responsible for the review of the loan application and for the determination of the creditworthiness of the borrower, in accordance with its own lending standards. The lender may not set off amounts invested by the Treasurer of State against obligations of the borrower or any other obligations.
The Authority shall serve as the Treasurer's representative for purposes of administering the Linked Investment Program under this rule. Fame shall develop all information,
forms and procedures necessary for the efficient and equitable administration of this program. The Authority shall advise the Treasurer as to the investment and other determinations to be made under this rule.
XI. Reservation/Application Fee
A. One half of the fee shall be remitted to the financial institution if the Authority receives notification that the associated loan is closed within 90 days of the original application date; or
B. The full fee will be remitted to the financial institution if the Authority receives notification that the associated loan is withdrawn within 90 days of the original application date; or
C. No portion of the fee will be remitted to the financial institution if the Authority has received no notice that the associated loan has been either closed or withdrawn within 90 days of the original application date.
For purposes of this section, "original application date" shall mean the date the application is stamped as having been received by the Authority.
STATUTORY AUTHORITY: 5 M.R.S.A. § 153, 5 M.R.S.A. § 135.
March 2, 1987, original rule
May 29, 1988, various amendments, 1991, including the addition of Section I(G) and XI; amendment of Section X;
March 6 1991, amendment 2, adding section I (A-1), section I (G), section III (C), paragraphs 2 and 3 of section III, section IV (I), and section XI, and amending section I (E), the last sentence of section III, section IV (H) and (I), and section VIII.
April 29, 1996
January 28, 1999 - converted to Microsoft Word.
Mach 13, 2002
APAO WORD VERSION CONVERSION (IF NEEDED) AND ACCESSIBILITY CHECK:July 19, 2025