11 AAC 39.740. Financing of fund property

(a) The maximum term of an installment contract may not exceed 30 years, the minimum interest rate may not be less than the effective rate provided under AS 03.l0.030(a)(4), and the minimum down payment may not be less than five percent of the purchase price.

(b) Each applicant must submit an application on a form approved by the board and include with the application

(1) a nonrefundable application fee of $50;

(2) federal and state income tax returns for the three years preceding the date of the application;

(3) financial statements, including assets and liabilities, that support the application;

(4) the amount of the installment contract requested and the plan of scheduled payments;

(5) a statement of the applicant whether the applicant is or was in the past the subject of a bankruptcy action and, if so, the date of the bankruptcy action; and

(6) a resume of experience, business history, and education of the applicant and relevant managerial personnel.

(c) Upon request, an applicant must obtain and provide any additional information and records reasonably necessary to support or clarify the application or the financial background of the applicant or any guarantor, including

(1) tax returns;

(2) detailed financial and other statements;

(3) projected income and expense statements;

(4) collateral offered;

(5) five-year agricultural plan;

(6) property appraisals;

(7) title reports;

(8) surveys;

(9) marketing studies;

(10) financial statements prepared by a certified public accountant; and

(11) copies of orders and decisions in any bankruptcy actions.

(d) A completed application for installment contract financing will be presented to the board at a meeting under 11 AAC 39.031 if

(1) the application complies with AS 03.10 and this chapter; and

(2) except in the case of emergency, is received by the division at least 30 calendar days before the date of the meeting.

(e) A corporation applying for financing by installment contract must submit a current certificate of good standing in the state and a corporate resolution authorizing the corporation to enter into such an agreement with the fund.

(f) A partnership, joint venture, or other business entity applying for installment contract financing must submit proof of the authority to enter into such a contract with the fund.

(g) To secure financing, the board may require an applicant to provide life insurance payable to the fund up to the amount financed.

(h) The board will require an applicant to provide property insurance on all buildings used as collateral and all other collateral stored in buildings, unless otherwise waived by the board for reasonable cause. The property insurance must be for the amount of the replacement of the collateral, and the fund must be named the loss payee. In addition to the requirements of this subsection, the board may require other types of insurance needed to protect and secure the installment contract.

(i) The applicant shall provide title insurance insuring the fund in the amount financed.

(j) The applicant shall pay all costs for processing and closing financing by installment contract.

(k) Within five working days after the board issues a decision on an application for financing by installment contract, the department will provide the applicant with a copy of the decision. The board will specify the terms and conditions that apply to the installment contract, and the reasons that support the action in the decision.

( l ) At the closing the applicant shall

(1) meet all conditions imposed by the board to be met by the closing;

(2) provide all information requested by the department; and

(3) execute promissory notes, real estate mortgages, deeds of trust, security agreements, financing statements, assignments, affidavits, insurance pay orders, and other instruments that the board may require relating to the installment contract.

(m) If an installment contract is not closed within 90 days following the written notice to the applicant of the approval of financing by installment contract, the approval expires. The board may extend the time for closing under this subsection for reasonable cause shown.

(n) Upon request, a person who obtains an installment contract must

(1) submit to the department, any additional information and records reasonably necessary to support or clarify the ability of the borrower to make payments and protect the collateral, including

(A) tax returns;

(B) projected income and expense statements;

(D) title reports;

(E) surveys;

(F) marketing studies;

(G) financial statements prepared by a certified public accountant; and

(H) copies of orders and decisions of the court

(i) affecting the collateral; or

(ii) concerning bankruptcy of the borrower.

(2) provide proof to the division that insurance is being maintained in the amount and type required by the terms of the installment contract;

(3) agree to allow the director or staff or its agents access to the borrower's books, records, and premises at all reasonable times.

History: Eff. 11/27/88, Register 108; am 9/1/99, Register 151; am 10/27/2002, Register 164

Authority: AS 03.09.040

AS 03.10.020

AS 03.10.050

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