AGRICULTURE CODE
CHAPTER 44. AGRICULTURAL DIVERSIFICATION AND MICROENTERPRISE
SUPPORT PROGRAMS
§ 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
linked deposit program and to provide collateral equal to the
amount of linked deposits placed with it.
(2) "Eligible borrower" means a person who is in the
business or entering the business of:
(A) processing and marketing agricultural crops
in this state;
(B) producing alternative agricultural crops in
this state;
(C) producing agricultural crops in this state
the production of which has declined because of natural disasters;
(D) producing agricultural crops in this state
using water conservation equipment for agricultural production
purposes; or
(E) providing nonagricultural goods or services
that provide an economic benefit to a municipality or county in a
rural area.
(3) "Alternative agricultural crops" means crops not
customarily grown in this state but that could feasibly be produced
in this state.
(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, § 1.
Amended by Acts 1989, 71st Leg., ch. 1247, § 3, eff. Sept. 1,
1989; Acts 1993, 73rd Leg., ch. 644, § 1, eff. Aug. 30, 1993;
Acts 1993, 73rd Leg., ch. 1041, § 3, eff. Aug. 30, 1993; Acts
1995, 74th Leg., ch. 419, § 5.01, eff. Sept. 1, 1995; Acts 1999,
76th Leg., ch. 1459, § 1, eff. June 19, 1999; Acts 2001, 77th
Leg., ch. 26, § 1, eff. May 2, 2001.
§ 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, § 1.
Amended by Acts 1989, 71st Leg., ch. 1247, § 4, eff. Sept. 1,
1989; Acts 1995, 74th Leg., ch. 419, § 5.02, eff. Sept. 1, 1995;
Acts 1999, 76th Leg., ch. 1459, § 2, eff. June 19, 1999.
§ 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, § 6, eff. Sept. 1, 1989.
Amended by Acts 1995, 74th Leg., ch. 419, § 5.04, eff. Sept. 1,
1995; Acts 1999, 76th Leg., ch. 1459, § 3, eff. June 19, 1999.
§ 44.007. LINKED DEPOSIT PROGRAM. (a) The board shall
establish a linked deposit program to:
(1) encourage commercial lending for the enhanced
production, processing, and marketing of certain agricultural
crops;
(2) encourage the development or expansion of
businesses in rural areas of this state; and
(3) finance water conservation projects or equipment
for agricultural production purposes.
(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 linked deposit program. The rules must include:
(1) a list of the categories of crops customarily
grown in Texas, with consideration given to the Texas Agricultural
Statistics Service information available and relevant to this
determination;
(2) a list of crops that are alternative agricultural
crops, with consideration given to the Texas Agricultural
Statistics Service information available and relevant to this
determination;
(3) identification of criteria for a project eligible
for natural disaster assistance; and
(4) identification of projects and types of equipment
considered as water conservation projects or equipment for
agricultural production purposes.
(d) In order to participate in the linked deposit 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. The
policy objectives of the rules may include preferences to:
(1) achieve adequate geographic distribution of
loans;
(2) assist certain industries;
(3) encourage certain practices including water
conservation; and
(4) encourage value-added processing of agricultural
products.
(l) A lending institution is not ineligible to participate
in the linked deposit 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, § 1.
Amended by Acts 1993, 73rd Leg., ch. 644, § 2, eff. Aug. 30,
1993; Acts 1995, 74th Leg., ch. 419, § 5.07, eff. Sept. 1, 1995;
Acts 1997, 75th Leg., ch. 891, § 3.02, eff. Sept. 1, 1997; Acts
1997, 75th Leg., ch. 901, § 1, eff. June 18, 1997; Acts 1997,
75th Leg., ch. 1010, § 5.10, eff. Sept. 1, 1997; Acts 1997, 75th
Leg., ch. 1423, § 2.02, eff. Sept. 1, 1997; Acts 1999, 76th
Leg., ch. 1459, § 4, eff. June 19, 1999; Acts 2001, 77th Leg.,
ch. 26, § 2, eff. May 2, 2001.
§ 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, § 1.
Amended by Acts 1995, 74th Leg., ch. 419, § 5.08, eff. Sept. 1,
1995; Acts 1997, 75th Leg., ch. 1010, § 5.10, eff. Sept. 1,
1997; Acts 1997, 75th Leg., ch. 1423, § 2.03, eff. Sept. 1,
1997.
§ 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, § 1.
Amended by Acts 1997, 75th Leg., ch. 1010, § 5.10, eff. Sept. 1,
1997.
§ 44.010. LIMITATIONS IN PROGRAM. (a) At any one time,
not more than $30 million, $10 million of which may be used only to
finance water conservation projects and $5 million of which may be
used only to finance the economic development of businesses in
rural areas, may be placed in linked deposits under this chapter.
(b) The maximum amount of a loan under this chapter to
process and market Texas agricultural crops is $500,000. The
maximum amount of a loan under this chapter to produce alternative
agricultural crops in this state is $250,000. The maximum amount of
a loan under this chapter to finance water conservation projects or
equipment for agricultural production purposes is $250,000. The
maximum amount of a loan under this chapter to finance production of
a crop declared eligible for natural disaster relief, as defined by
board rule, is $250,000. The maximum amount of a loan under this
chapter to finance a business in a rural area is $250,000.
(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, § 1.
Amended by Acts 1993, 73rd Leg., ch. 644, § 3, eff. Aug. 30,
1993; Acts 1997, 75th Leg., ch. 1010, § 5.10, eff. Sept. 1,
1997; Acts 1999, 76th Leg., ch. 1459, § 5, eff. June 19, 1999;
Acts 2001, 77th Leg., ch. 26, § 3, eff. May 2, 2001.
§ 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, § 1.
Amended by Acts 1989, 71st Leg., ch. 1247, § 7, eff. Sept. 1,
1989; Acts 1995, 74th Leg., ch. 419, § 5.10, eff. Sept. 1, 1995;
Acts 1999, 76th Leg., ch. 1459, § 6, eff. June 19, 1999.
§ 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, § 8, eff. Sept. 1, 1989.
Amended by Acts 1999, 76th Leg., ch. 1459, § 6, eff. June 19,
1999.
