(a) Loans made under this chapter shall be for the purposes and in accordance with the terms specified in classes “A” through “I” in this section and shall be made only to applicants who meet the eligibility requirements specified therein and except as to class “B” loans to associations and class “E” loans, the eligibility requirements specified in § 155-10. The maximum amount of a loan for class “A”, “C”, “D”, and “F” loans to an individual applicant shall also apply to any loan application submitted by a partnership, corporation, or other entity, and for the purpose of determining whether the maximum loan amount to any individual will be exceeded, outstanding loans to any partnership, corporation, or other entity that the individual has a legal or equitable interest in excess of twenty per cent shall be taken into account.

Terms Used In Hawaii Revised Statutes 155-9

  • Biosecurity: means a system that serves to protect the health of livestock, poultry, and humans from diseases, pests, and pathogens and measures that prevent disease causing agents from entering, spreading, or leaving the farm premises. See Hawaii Revised Statutes 155-1
  • Cooperative: means a nonprofit association of farmers organized under chapter 421. See Hawaii Revised Statutes 155-1
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
  • Farm land: means land used for agricultural purposes, including general farming, cane growing, fruit growing, flower growing, grazing, dairying, the production of any form of livestock or poultry, and any other form of agricultural activity. See Hawaii Revised Statutes 155-1
  • Food manufacturers: means entities that process Hawaii-grown agricultural products or that utilize Hawaii-grown agricultural products as an ingredient in the manufacturing process. See Hawaii Revised Statutes 155-1
  • Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
  • New farmer: means a new farm enterprise or a person, who by reason of ability, experience, and training, is likely to successfully operate a farm and who otherwise meets the eligibility requirements of § 155-10 and includes any of the following:

    (1) Persons displaced from employment in an agricultural production enterprise;

    (2) College graduates in agriculture;

    (3) Community college graduates in agriculture;

    (4) Members of the Hawaii Young Farmer Association and National FFA Organization graduates with farming projects;

    (5) Persons who have not less than two years' experience as part-time farmers;

    (6) Graduates from farm trainee programs designed to provide interns with the necessary hands-on skills and management training to successfully operate their own farm;

    (7) Persons who have been farm tenants or farm laborers; or

    (8) Other individuals who have for the two years last preceding their application obtained the major portion of their income from farming operations. See Hawaii Revised Statutes 155-1

  • Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
  • Qualified farmer: means a person of proven farming ability who operates the person's own farm on land owned by the person in fee or on land rented or leased from others and who is presently devoting, has recently devoted, or intends to devote most of the person's time or who derives a major portion of the person's net cash income from direct participation in farming in its broadest sense. See Hawaii Revised Statutes 155-1
  • Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
(b) Class A: Farm ownership and improvement loans shall provide for:

(1) The purchase or improvement of farm land;
(2) The purchase, construction, or improvement of adequate farm dwellings, and other essential farm buildings; and
(3) The liquidation of indebtedness incurred for any of the foregoing purposes.

The loans shall be for an amount not to exceed $800,000 and for a term not to exceed forty years. To be eligible, the applicant shall (A) derive, or present an acceptable plan to derive, a major portion of the applicant’s income from and devote, or intend to devote, most of the applicant’s time to farming operations; and (B) have or be able to obtain the operating capital, including livestock and equipment, needed to successfully operate the applicant’s farm.

(c) Class B: Soil and water conservation loans shall provide for:

(1) Soil conservation practices;
(2) Water development, conservation, and use;
(3) Drainage; and
(4) The liquidation of indebtedness incurred for any of the foregoing purposes.

The loans shall be for an amount not to exceed $35,000 to an individual or $200,000 to an association and shall be for a term not to exceed twenty years for a loan to an individual and forty years to an association. To be eligible, an individual applicant shall have sufficient farm and other income to pay for farm operating and living expenses and to meet payments on applicant’s existing debts, including the proposed soil and water conservation loan. An association, to be eligible, shall be a nonprofit organization primarily engaged in extending services directly related to the purposes of the loan to its members, and at least sixty per cent of its membership shall meet the eligibility requirements specified in § 155-10.

(d) Class C: Farm operating loans shall be for the purpose of carrying on and improving a farming operation, including:

(1) The purchase of farm equipment and livestock;
(2) The payment of production and marketing expenses, including materials, labor, and services;
(3) The payment of living expenses;
(4) The liquidation of indebtedness incurred for any of the foregoing purposes; and
(5) The exportation of crops and livestock.

The loans shall be for an amount not to exceed $800,000 and for a term not to exceed ten years. To be eligible, an applicant shall derive, or present an acceptable plan to derive, a major portion of the applicant’s income from and devote, or intend to devote, most of the applicant’s time to farming operations.

Qualified farmers affected by state eradication programs may also be eligible for loans under this subsection. Loans made for rehabilitation from eradication programs shall be subject to the terms of class “C” loans; provided that the interest rate shall be three per cent a year and the requirements in § 155-3 shall be waived and paragraph (4) shall not apply.

(e) Class D: Emergency loans shall be for the purpose of providing relief and rehabilitation to qualified farmers without limit as to purpose:

(1) In areas stricken by extraordinary rainstorms, windstorms, droughts, tidal waves, earthquakes, volcanic eruptions, and other natural catastrophes;
(2) On farms stricken by livestock disease epidemics and crop blights;
(3) On farms seriously affected by prolonged shipping and dock strikes;
(4) During economic emergencies caused by overproduction, excessive imports, and the like; and
(5) During other emergencies as determined by the board of agriculture.

The maximum amounts and period for the loans shall be determined by the board of agriculture; provided that the board shall require that any settlement or moneys received by qualified farmers as a result of an emergency declared under this section shall first be applied to the repayment of an emergency loan made under this chapter.

(f) Class E: Loans to farmers’ cooperatives, corporations, and food manufacturers shall provide credit to entities engaged in marketing, purchasing, and processing, and providing farm business services, including:

(1) Facility loans to purchase or improve land, building, and equipment for an amount not to exceed $500,000 and a term not to exceed twenty years;
(2) Operating loans to finance inventories of supplies and materials, warehousing, and shipping commodities, extension of consumer credit to justified farmer-members, and other normal operating expenses for an amount not to exceed $300,000 and a term not to exceed seven years; and
(3) The exportation of crops and livestock.

To be eligible, a farmers’ cooperative or corporation shall have a majority of its board of directors and a majority of its membership as shareholders who meet the eligibility requirements of § 155-10 and who devote most of their time to farming operations, and the facility loans shall be for an amount not to exceed $500,000 or eighty per cent of the cost of the project, whichever is less.

To be eligible, a food manufacturer shall be licensed to do business in the State, and the controlling interest of the entity shall possess a minimum of two years of relevant processing or manufacturing experience as acceptable to the department of agriculture. The entity shall process Hawaii-grown agricultural products or use Hawaii-grown agricultural products as an ingredient in the manufacturing process. Facility loans shall be for an amount not to exceed $500,000 or eighty per cent of the cost of the project, whichever is less. The requirements in § 155-10 shall be waived for food manufacturing loans; however, the entity shall be a sound credit risk with the ability to repay the money borrowed.

(g) Class F: New farmer and farm innovation loan programs shall provide for:

(1) New farmer loans made under this class shall be for purposes and in accordance with the terms specified in class “A” and “C” only, and shall be made only for full-time farming. The loans shall be made for an amount not to exceed $250,000 or eighty-five per cent of the cost of the project, whichever is less. Farm trainees and recent graduates with a degree in agriculture with smaller projects requiring loans of $100,000 or less shall have a minimum five per cent equity contribution towards the cost of the project;
(2) Farm innovation loans made under this class shall be for qualified farmers to perform practical research in crop development, innovative production techniques, new technologies, and production of new crops that are not typically grown in the State. Farm innovation loans shall be limited to a maximum of $75,000;
(3) Any subsequent loan shall be made from classes “A” to “D”, respectively, depending upon the purpose for which the loan funds are used; and
(4) Borrowers shall comply with special term loan agreements as may be required by the department and shall take special training courses as the department deems necessary.
(h) Class G: Loans to part-time farmers shall be for farm improvement and operating purposes for carrying on and improving farming operations, including loans for:

(1) The purchase, construction, and improvement of farm production and growing structures;
(2) The purchase of farm equipment or livestock; and
(3) The payment of production and marketing expenses, including materials, labor, and services.

The liquidation of indebtedness incurred for any of the purposes under this subsection and for living expenses shall not be authorized purposes. Each loan shall be for an amount not to exceed $25,000 and for a term not to exceed ten years.

(i) Class H: Farm sustainable project loans shall provide for:

(1) The purchase, construction, or improvement of essential farm buildings, including the improvement of existing farm buildings related to the project;
(2) The improvement of land that may be required by the project;
(3) The purchase of equipment and payment of any related expenses, including materials, labor, and services;
(4) Operating expenses associated with the project; or
(5) The liquidation of indebtedness incurred for any of the foregoing purposes.

The loans shall be for an amount not to exceed $1,500,000 or eighty-five per cent of the project cost, whichever is less, and for a term not to exceed forty years.

To be eligible, the applicant shall be a qualified farmer of sound credit rating with the ability to repay the money borrowed, as determined by the department. Income from the applicant’s farming activities and any supplemental income that may be generated from the project shall be the sole criterion for the department’s determination of the applicant’s ability to repay the money borrowed. The department’s determination may be based on projections of income and expenses.

(j) Class I: Biosecurity project loans shall provide for:

(1) The purchase, construction, or improvement of essential farm buildings, including the improvement of existing farm buildings related to the project;
(2) The improvement of land that may be required by the project;
(3) The purchase of equipment and payment of any related expenses, including materials, labor, signage, training, and services;
(4) Operating expenses associated with the project; or
(5) The liquidation of indebtedness incurred for any of the foregoing purposes.

The loans shall be for an amount not to exceed $1,000,000 or eighty-five per cent of the project cost, whichever is less, and for a term not to exceed twenty-five years.

To be eligible, the applicant shall be a qualified farmer of sound credit rating with the ability to repay the money borrowed, as determined by the department. Income from the applicant’s farming activities and any supplemental income that may be generated from the project shall be the sole criterion for the department’s determination of the applicant’s ability to repay the money borrowed. The department’s determination may be based on projections of income and expenses.

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