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rural rehabilitation supervisors, will be exercised by such delegatees, subject to the limitations and conditions contained in this subpart and in applicable orders and instructions of the Farm Security Administration.*t [Par. 7b]

SUBPART-LOANS TO INDIVIDUALS FOR PARTICIPATION IN COOPERATIVE AND GROUP SERVICE LOANS

303.71 Purposes. Loans may be made to individual rural rehabilitation clients, resettlement clients, and heads of destitute and lowincome farm families to enable them to purchase participation rights or memberships in community and cooperative associations, either now existing or to be established, or to acquire property or services jointly or individually for joint benefit. This class of loan is subdivided into three subclasses as follows: (a) Loans to individuals for the purpose of participation in an already existing cooperative, which participation may be in the form of a fee, a membership charge, or the purchase of a share of stock; (b) loans to individuals of a group for the purpose of providing a specific facility or service, in which instance the funds lent to each individual of the group will be pooled in order to provide the facility or service (This does not exclude other individuals from using their own funds to add to the pool.); and (c) loans to individuals for the purpose of providing a facility or service for the benefit of a group, in which instance the loan is made to an individual who must give adequate security and be responsible for the use and care of the facility or service purchased. Provision should be made in this type of loan to insure reasonable charges for the services to the group to be benefited and to prevent the borrower from making excessive profits from the operation of the service.

Loans to individuals to participate in approved community and cooperative associations which further rural rehabilitation or relief in stricken agricultural areas or which are organized in connection. with approved resettlement community projects may be made for the purposes given in § 304.4.* [Pars. 2a II, 5a, A.O. 40, rev. 2, Sept. 26, 1936]

303.72 Security. An individual receiving a loan to participate in a community or cooperative service or to acquire property or services jointly or individually for joint benefit shall execute a note and furnish such other evidence of indebtedness and security as will be required under the terms of his loan agreement.* [Par. 7b, A.O. 40, rev. 2, Sept. 26, 1936]

303.73 Period of loan. Loans will be for the shortest period consistent with the purpose and policies of Administration Order 40 (Revision 2), September 26, 1936, considering the use to which the proceeds thereof are to be put, the financial resources and earning capacity of the borrower, and, in the case of loans to finance the purchase of specific property, the probable rate of depreciation, the estimated life thereof, and the amount of the loan as compared with the total purchase price, but in no case will the period exceed 40 years. When a loan is made for purposes which dictate different

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*For statutory citation, see note to § 303.21.

maximum periods of payment, repayment will be computed and will be required for each type of loan in accordance with the preceding sentence. [Par. 8, A.Ö. 40, rev. 2, Sept. 26, 1936]

303.74 Amortization. Loans which have a maturity of less than 2 years will be repaid in such installments of principal and interest as the Administrator may determine. Efforts will be made, however, to have such loans repayable in quarterly, semiannual, or annual equal instalments of principal and interest. Loans which have a maturity in excess of 2 years will be repayable in equal annual instalments of principal with interest added or in equal annual instalments including interest. In the case of loans to individuals which have a maturity of 5 years or more, deferment of repayment of principal during the first 3 years may be made if the borrower is subject to either of the following conditions: The necessity of meeting during the first 3 years heavy repayments on old debts or Farm Security Administration loans; or the necessity of the cooperative association for building up reserves, thus deferring the payment of rebates and dividends to the participants during this period. [Par. 9, A.O. 40, rev. 2, Sept. 26, 1936]

303.75 Rate of interest. In the case of loans to individuals wherein the proceeds of the loans will result in the acquisition of real or personal property or interest therein by such individuals, and when such property will be used jointly by two or more individuals, interest will be charged at the rate of 3 percent per annum on balances remaining unpaid from time to time, and such loans shall be known and reported as cooperative loans to individuals and shall be made in conformance with the provisions of Administration Order 40 (Revision 2), September 26, 1936. In this category will be included loans to individuals for the purpose of participating in medical, health and veterinary associations and loans to individuals for the purpose of participating in an already existing cooperative.

In the case of loans to individuals wherein the proceeds of the loans result merely in payment for the rental or use of property or for services made available under the provisions of Administration Order 40 (Revision 2), September 26, 1936, and when the borrowers do not acquire any interest in such property or in the source of such services, interest will be charged at the rate of 5 percent per annum on balances remaining unpaid from time to time. Such a loan may be a part of a standard rural rehabilitation loan or supplementary thereto in the cases of standard rural rehabilitation clients. In the case of destitute and low-income farm families who are not rural rehabilitation clients, such loans will be known and reported as emergency rural rehabilitation loans and they will be certified for payment out of any rehabilitation allocations which have not been fully encumbered.

In cases where two rates of interest are charged in the same loan, the rate or rates on the portion of the loan to which each applies must be clearly indicated in the loan agreement. [Pars, 10b, 10c, 10d, A.O. 40, rev. 2, Sept. 26, 1936]

*For statutory citation, see note to § 303.21.

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303.76 Reports. Any individual receiving a cooperative loan or any group of individuals severally receiving individual cooperative loans will file with the Administrator during the period of the Loan Agreement a semiannual progress report, Form FSA-RR 178, Quarterly Progress Report-Services Established through Cooperative Loans to Individuals, for each kind of service for each half year ending March 31, and September 30, of each calendar year.* [Par. 3a, A.O. 40, rev. 2, Supp. 5, Sept. 11, 1937]

303.77 Procedure. No individual participation loan or group service loan shall be made for less than twenty dollars ($20), except to a standard rural rehabilitation client in connection with a Farm and Home Plan either as a part of an initial or supplementary loan. For loans less than fifty dollars ($50), the county rural rehabilitation supervisor will prepare one set in quadruplicate (original and three copies) of Form FSA-RR 23 and, in addition, he will prepare for each borrower the proper documents and attach the latter to the original copy of Form FSA-RR 23.

Loans to participate in cooperative associations or to acquire property or services jointly or individually for joint benefit for fifty dollars ($50) or more shall be made only as a standard loan in accordance with §§ 303.21-303.30, and Administration Instruction 35 (Revision 1), March 23, 1936, as a part of the standard farm plan either as a supplemental or initial loan to clients and low-income families. All loans for fifty dollars ($50) or more to acquire property or services jointly or individually for joint benefit will be supported by farm plans involving the entire farming operation. Farm plans developed on Form FSA-RR 14 should carry all expense and income items involved in financing individual or joint ownership of group services and/or individual membership or stock ownership or participation in cooperative associations. Funds requested for such loans will be set forth on Form FSA-RR 15, Loan Agreement, under Advance Repayable in Less Than Five Years and will be described as "for participation in facility or service", and the name of the service will be added as shown on Form FSA-RR 23. Form FSA-RR 23 must be prepared for all Applications involving individual or joint ownership of a group service or participation in a cooperative association and will accompany the loan dockets in accordance with Administration Order 40 (Revision 2), September 26, 1936, (except as provided in paragraph 12b II A thereof). Where the participation of a substantial percentage of all members of a cooperative association is being financed by the Farm Security Administration, Form FSA-RR 23 should be supported by evidence that the cooperative association complies with the provisions of paragraph 3a and b of Administration Order 40 (Revision 2), September 26, 1936. A copy of each Application, Form FSA-RR 23, will be forwarded to Washington. [Pars. 2c, 2e, A.O. 40, rev. 2, Supp. 5, Sept. 11, 1937]

*

303.78 Construction and establishment of approved services. The Farm Security Administration will not make any purchases or carry out any construction in connection with the establishment of

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*For statutory citation, see note to § 303.21.

approved services of this type. Clients will use the proceeds of loans for these purposes under the general supervision of the county rural rehabilitation supervisor, together with such additional services of a technical nature as may be authorized by the regional director.* [Par. 12d I, A.O. 40, rev. 2, Sept. 26, 1936]

SUBPART-LOANS TO OCCUPANTS OF RURAL RESETTLEMENT TYPE PROJECTS FOR OPERATING CAPITAL

303.91 Families eligible. Loans will be granted only to the heads of families of types described in § 302.2 in occupancy under approved tenure forms. Applicants not eligible for resettlement but for whom it is desired to secure loans in order to farm Farm Security Administration land will make application to the appropriate rural rehabilitation supervisor. Such loans will be made from regular rural rehabilitation funds.* [Par. 2, A.O. 219, Jan. 23, 1937]

303.92 Purposes for which operating goods loans may be made. Loans for operating goods will be made to accepted families on the basis of Form FSA-RR 14, Annual Farm Business Statement and Farm Plan, for the following purposes:

The purchase of horses, mules, cattle, hogs, sheep, poultry or other livestock needed for the proper operation of the farm.

The purchase of feed, seed, fertilizers and other supplies, goods and services necessary for the effective operation of the farm unit.

The purchase of farm machinery, equipment and other necessary farm supplies.

The purchase of furniture and household equipment.

The purchase of food, fuel, clothing and other subsistence goods for human needs, and payment of indispensable medical services, when cooperative facilities are not available.

Payment of recording and filing fees.

Minor construction or repair of building or fences, the drilling or repairing of wells, leveling, clearing or dyking of land or such other improvements as may be necessary to the proper carrying out of the Farm and Home Management Plan prepared for the farm.

Cost of moving occupants, not to exceed a maximum of one hundred dollars ($100) per family.

Payment of principal and/or interest on chattel mortgages or other liens on personal property, upon the personal approval of the regional director where necessary to prevent foreclosure, and providing that such refinancing is necessary for the successful rehabilitation of the occupant, and provided such refinancing is recommended in writing by the Farm Debt Adjustment committee.

Payment of rent to vendors where title is not yet vested in the United States.* [Par. 4a, A.O. 219, Jan. 23, 1937]

303.93 Terms and conditions. Loans may be made for maximum periods of 2 and 5 years depending upon the use to which the proceeds are put, as defined in §§ 303.21-303.30. The regional director may, if he deems it desirable and necessary, make loans for a period not to exceed 10 years. Loans in excess of 5 years will be granted only in unusual situations where the financial circumstances of the

*For statutory citation, see note to § 303.21.

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client require the longer terms and the life of the operating goods purchased from proceeds of the loan warrants the longer amortization period.

The interest rate on operating goods loans will be that prescribed in § 303.25. [Par. 1, A.Ó. 219, Supp. 1, June 5, 1937, par. 4c, A.O. 219, Jan. 23, 1937]

303.94 Repayments. In any case where payments made by the occupants shall be insufficient to cover rental and also the full repayment on loans, the payment shall be applied first on the rental and the remainder on the other loans.* [Par. 8a II, A.O. 219, Jan. 23, 1937]

303.95 Security. All loans for operating goods made under the provisions of this subpart, shall be evidenced by a promissory note or notes, payable to the Farm Security Administration either in the full amount of the approved Loan Agreement or in the amount of the advance being made.

A chattel mortgage or similar lien shall be taken on personal property acquired with the proceeds of the loan in the full amount of the purchase price of such property before the first check is delivered. A mortgage shall be taken on all crops growing or to be grown, as security for funds advanced for the purchase of nonrecoverable goods or as security for the payment of rent or funds advanced for payment of rent. The period of time for which any chattel mortgage or similar lien shall be taken will be determined by the limitations of local law applicable to the period of time for which chattel mortgages or similar liens may be taken and the probable period of time for which the chattel to be acquired through the proceeds of the loan will have a useful existence.

Additional security may be taken for such loans in the form of real estate or chattel mortgages or similar liens as first liens on all of the borrower's unencumbered property or as junior liens on all of the borrower's encumbered property.* [Par. 8b, A.O. 219, Jan. 23, 1937]

303.96 Releases. The policy and procedure as set forth in §§ 303.155-303.160 will be followed in executing releases of mortgages or similar liens taken in connection with operating goods loans. [Par. 1, A.O. 219, Supp. 4, Sept. 15, 1937, 2 F.R. 1955]

SUBPART-LOANS TO INDIVIDUALS FOR CONSTRUCTION ON RESETTLEMENT LANDS OCCUPIED UNDER LEASE AND PURCHASE CONTRACTS

303.116 Families eligible. Types of families prescribed in §302.2 are eligible to enter into lease and purchase contracts and secure loans under this subpart. Loans for construction or repair or improvements will be made to heads of families eligible for resettlement under approved Lease and Purchase Contract.* [Par. 2, A.O. 226, rev. 1, May 18, 1937]

303.117 Terms, conditions and purposes for which construction loans and lease and purchase of land may be made. The price of the land to be stipulated in the Lease and Purchase Contract will be the purchase price paid by the Government (or rehabilitation cor

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*For statutory citation, see note to § 303.21.

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