CHAPTER 44. AGRICULTURAL DIVERSIFICATION AND MICROENTERPRISE SUPPORT PROGRAMS - Texas Statutes

AGRICULTURE CODE

TITLE 3. AGRICULTURAL RESEARCH AND PROMOTION

CHAPTER 44. AGRICULTURAL DIVERSIFICATION AND MICROENTERPRISE

SUPPORT PROGRAMS

Sec. 44.001. DEFINITIONS. In this chapter:

(1) "Eligible lending institution" means a financial institution

that makes commercial loans, is either a depository of state

funds or an institution of the Farm Credit System headquartered

in this state, and agrees to participate in the interest rate

reduction program and to provide collateral equal to the amount

of linked deposits placed with it.

(2) "Eligible borrower" means a person who proposes to use the

proceeds of a loan under this chapter in a manner that will help

accomplish the state's goal of fostering the creation and

expansion of enterprises based on agriculture in this state.

(3) Repealed by Acts 2009, 81st Leg., R.S., Ch. 506, Sec.

1.21(1), eff. September 1, 2009.

(4) "Linked deposit" means a time deposit governed by a written

deposit agreement between the state and an eligible lending

institution that provides:

(A) that the eligible lending institution pay interest on the

deposit at a rate that is not less than the greater of:

(i) the current market rate of a United States treasury bill or

note of comparable maturity minus two percent; or

(ii) 1.5 percent;

(B) that the state not withdraw any part of the deposit before

the expiration of a period set by a written advance notice of the

intention to withdraw; and

(C) that the eligible lending institution agree to lend the

value of the deposit to an eligible borrower at a maximum rate

that is the linked deposit rate plus a maximum of four percent.

(5) "Microenterprise" means a small business located in a rural

area in which the owner operates the enterprise. Priority under

this chapter shall be given to microenterprises which demonstrate

significant potential for expansion that will provide jobs in

economically depressed rural communities or to currently

unemployed rural residents.

(6) "Rural area" means an area which is predominantly rural in

character, being one which the board defines and declares to be a

rural area.

(7) "Board" means the board of directors of the Texas

Agricultural Finance Authority in Chapter 58.

Added by Acts 1987, 70th Leg., 2nd C.S., ch. 32, art. 1, Sec. 1,

eff. Nov. 3, 1987. Amended by Acts 1989, 71st Leg., ch. 1247,

Sec. 3, eff. Sept. 1, 1989; Acts 1993, 73rd Leg., ch. 644, Sec.

1, eff. Aug. 30, 1993; Acts 1993, 73rd Leg., ch. 1041, Sec. 3,

eff. Aug. 30, 1993; Acts 1995, 74th Leg., ch. 419, Sec. 5.01,

eff. Sept. 1, 1995; Acts 1999, 76th Leg., ch. 1459, Sec. 1, eff.

June 19, 1999; Acts 2001, 77th Leg., ch. 26, Sec. 1, eff. May 2,

2001.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

506, Sec. 1.01, eff. September 1, 2009.

Acts 2009, 81st Leg., R.S., Ch.

506, Sec. 1.21(1), eff. September 1, 2009.

Sec. 44.002. CREATION OF MICROENTERPRISE PROGRAMS. The board

shall create a microenterprise support program to provide

financial assistance to microenterprises in rural areas.

Added by Acts 1987, 70th Leg., 2nd C.S., ch. 32, art. 1, Sec. 1,

eff. Nov. 3, 1987. Amended by Acts 1989, 71st Leg., ch. 1247,

Sec. 4, eff. Sept. 1, 1989; Acts 1995, 74th Leg., ch. 419, Sec.

5.02, eff. Sept. 1, 1995; Acts 1999, 76th Leg., ch. 1459, Sec. 2,

eff. June 19, 1999.

Sec. 44.0045. MICROENTERPRISE SUPPORT PROGRAM LOANS. (a) The

board shall administer a loan program supporting established and

proposed microenterprises in rural areas by providing loans to

expand, modernize, or otherwise improve established

microenterprises and to begin operation of proposed

microenterprises.

(b) An applicant applying on behalf of a proposed

microenterprise may receive a loan of up to $25,000 to begin

operation of the microenterprise.

(c) An applicant applying on behalf of an established

microenterprise may receive a loan of up to $50,000 to expand,

modernize, or otherwise improve an established operation.

(d) The board may reserve a portion of the total fund for use in

cooperative loan programs established with the participation of

other public or private lenders.

Added by Acts 1989, 71st Leg., ch. 1247, Sec. 6, eff. Sept. 1,

1989. Amended by Acts 1995, 74th Leg., ch. 419, Sec. 5.04, eff.

Sept. 1, 1995; Acts 1999, 76th Leg., ch. 1459, Sec. 3, eff. June

19, 1999.

Sec. 44.007. INTEREST RATE REDUCTION PROGRAM. (a) The board

shall establish an interest rate reduction program to foster the

creation and expansion of enterprises based on agriculture in

this state.

(b) The board shall approve or disapprove any and all

applications under this chapter, provided that the board may

delegate this authority to the commissioner.

(c) The board shall promulgate rules for the loan portion of the

interest rate reduction program.

(d) In order to participate in the interest rate reduction

program, an eligible lending institution may solicit loan

applications from eligible borrowers.

(e) After reviewing an application and determining that the

applicant is eligible and creditworthy, the eligible lending

institution shall send the application for a linked deposit loan

to the administrator of the Texas Agricultural Finance Authority.

(f) The eligible lending institution shall certify the interest

rate applicable to the specific eligible borrower and attach it

to the application sent to the administrator of the Texas

Agricultural Finance Authority.

(g) After reviewing each linked deposit loan application, the

board or the commissioner shall recommend to the comptroller the

acceptance or rejection of the application.

(h) After acceptance of the application, the comptroller shall

place a linked deposit with the applicable eligible lending

institution for the period the comptroller considers appropriate.

The comptroller may not place a deposit for a period extending

beyond the state fiscal biennium in which it is placed. Subject

to the limitation described by Section 44.010, the comptroller

may place time deposits at an interest rate described by Section

44.001(4).

(i) Before the placing of a linked deposit, the eligible lending

institution and the state, represented by the comptroller, shall

enter into a written deposit agreement containing the conditions

on which the linked deposit is made.

(j) If a lending institution holding linked deposits ceases to

be either a state depository or a Farm Credit System institution

headquartered in this state, the comptroller may withdraw the

linked deposits.

(k) The board may adopt rules that create a procedure for

determining priorities for loans granted under this chapter.

Each rule adopted must state the policy objective of the rule.

(l) A lending institution is not ineligible to participate in

the interest rate reduction program solely because a member of

the board is also an officer, director, or employee of the

lending institution, provided that a board member shall recuse

himself or herself from any action taken by the board on an

application involving a lending institution by which the board

member is employed or for which the board member serves as an

officer or director.

Added by Acts 1987, 70th Leg., 2nd C.S., ch. 32, art. 1, Sec. 1,

eff. Nov. 3, 1987. Amended by Acts 1993, 73rd Leg., ch. 644, Sec.

2, eff. Aug. 30, 1993; Acts 1995, 74th Leg., ch. 419, Sec. 5.07,

eff. Sept. 1, 1995; Acts 1997, 75th Leg., ch. 891, Sec. 3.02,

eff. Sept. 1, 1997; Acts 1997, 75th Leg., ch. 901, Sec. 1, eff.

June 18, 1997; Acts 1997, 75th Leg., ch. 1010, Sec. 5.10, eff.

Sept. 1, 1997; Acts 1997, 75th Leg., ch. 1423, Sec. 2.02, eff.

Sept. 1, 1997; Acts 1999, 76th Leg., ch. 1459, Sec. 4, eff. June

19, 1999; Acts 2001, 77th Leg., ch. 26, Sec. 2, eff. May 2, 2001.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

506, Sec. 1.02, eff. September 1, 2009.

Acts 2009, 81st Leg., R.S., Ch.

506, Sec. 1.03, eff. September 1, 2009.

Sec. 44.008. COMPLIANCE. (a) On accepting a linked deposit, an

eligible lending institution must loan money to eligible

borrowers in accordance with the deposit agreement and this

chapter. The eligible lending institution shall forward a

compliance report to the board.

(b) The board shall monitor compliance with this chapter and

inform the comptroller of noncompliance on the part of an

eligible lending institution.

Added by Acts 1987, 70th Leg., 2nd C.S., ch. 32, art. 1, Sec. 1,

eff. Nov. 3, 1987. Amended by Acts 1995, 74th Leg., ch. 419, Sec.

5.08, eff. Sept. 1, 1995; Acts 1997, 75th Leg., ch. 1010, Sec.

5.10, eff. Sept. 1, 1997; Acts 1997, 75th Leg., ch. 1423, Sec.

2.03, eff. Sept. 1, 1997.

Sec. 44.009. STATE LIABILITY PROHIBITED. The state is not

liable to an eligible lending institution for payment of the

principal, interest, or any late charges on a loan made to an

eligible borrower. A delay in payment or default on a loan by an

eligible borrower does not affect the validity of the deposit

agreement. Linked deposits are not an extension of the state's

credit within the meaning of any state constitutional

prohibition.

Added by Acts 1987, 70th Leg., 2nd C.S., ch. 32, art. 1, Sec. 1,

eff. Nov. 3, 1987. Amended by Acts 1997, 75th Leg., ch. 1010,

Sec. 5.10, eff. Sept. 1, 1997.

Sec. 44.010. LIMITATIONS IN PROGRAM. (a) At any one time, not

more than $30 million may be placed in linked deposits under this

chapter.

(b) The maximum amount of a loan under this chapter is $500,000.

(c) A loan granted pursuant to this chapter may be used for any

agriculture-related operating expense, including the purchase or

lease of land or fixed assets acquisition or improvement, as

identified in the application.

(d) A loan granted pursuant to this chapter may be applied to

existing debt as described in Section 44.007.

Added by Acts 1987, 70th Leg., 2nd C.S., ch. 32, art. 1, Sec. 1,

eff. Nov. 3, 1987. Amended by Acts 1993, 73rd Leg., ch. 644, Sec.

3, eff. Aug. 30, 1993; Acts 1997, 75th Leg., ch. 1010, Sec. 5.10,

eff. Sept. 1, 1997; Acts 1999, 76th Leg., ch. 1459, Sec. 5, eff.

June 19, 1999; Acts 2001, 77th Leg., ch. 26, Sec. 3, eff. May 2,

2001.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

506, Sec. 1.04, eff. September 1, 2009.

Sec. 44.012. MONEY FOR LOANS. The board may accept gifts and

grants of money from the federal government, local governments,

or private corporations or other persons for use in making loans

under the rural microenterprise support program. The legislature

may appropriate money for loans under the program.

Added by Acts 1987, 70th Leg., 2nd C.S., ch. 32, art. 1, Sec. 1,

eff. Nov. 3, 1987. Amended by Acts 1989, 71st Leg., ch. 1247,

Sec. 7, eff. Sept. 1, 1989; Acts 1995, 74th Leg., ch. 419, Sec.

5.10, eff. Sept. 1, 1995; Acts 1999, 76th Leg., ch. 1459, Sec. 6,

eff. June 19, 1999.

Sec. 44.013. RURAL MICROENTERPRISE DEVELOPMENT FUND. The rural

microenterprise development fund is a fund in the comptroller's

office. Money appropriated to the board for use in making loans

under the rural microenterprise support program, other amounts

received by the state for loans made under the program, and other

money received by the board for the program and required by the

board to be deposited in the fund shall be deposited to the

credit of the fund. The fund shall operate as a revolving fund,

the contents of which shall be applied and reapplied for the

purposes of the rural microenterprise support program.

Added by Acts 1989, 71st Leg., ch. 1247, Sec. 8, eff. Sept. 1,

1989. Amended by Acts 1999, 76th Leg., ch. 1459, Sec. 6, eff.

June 19, 1999.