§219-8 Participation in loans by the department.

(1) The department of agriculture may provide funds for a share, not to exceed ninety per cent, of the principal amount of a loan made to a qualified aquaculturist by a private lender who is unable otherwise to lend the applicant sufficient funds at reasonable rates where the qualified farmer is unable to obtain sufficient funds for the same purpose from the United States Department of Agriculture;

(2) Participation loans under this section shall be limited by the provisions of section 219-6 and the department of agriculture's share shall not exceed the maximum amounts specified therefor;

(3) Interest charged on the private lender's share of the loan shall not be more than the sum of two per cent above the lowest rate of interest charged by all state or national banks authorized to accept or hold deposits in the State on secured short term loans made to borrowers who have the highest credit rating with those banks;

(4) The private lender's share of the loan may be insured by the department up to ninety per cent of the principal balance of the loan, under section 219-7;

(5) When a participation loan has been approved by the department, its share shall be paid to the participating private lender for disbursement to the borrower. The private lender shall collect all payments from the borrower and otherwise service the loan;

(6) Out of interest collected, the private lender may be paid a service fee to be determined by the department which fee shall not exceed one per cent of the unpaid principal balance of the loan; provided that this fee shall not be added to any amount which the borrower is obligated to pay;

(7) The participating private lender may take over a larger percentage or the full principal balance of the loan at any time that it has determined, to the satisfaction of the department, that the borrower is able to pay any increased interest charges resulting; and

(8) Security for participation loans shall be limited by section 219-5(a)(6). All collateral documents shall be held by the private lender. Division of interest in collateral received shall be in proportion to participation by the department and the private lender. [L 1977, c 212, pt of §2; am L 1989, c 261, §11; am L 1993, c 350, §10; am L 1997, c 258, §13; am L 2001, c 55, §8(3)]