S2401

An Act concerning loans to certain farming operations and amending P.L.2011, c.201.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 1 of P.L.2011, c.201 (C.34:1B-241.1) is amended to read as follows:

1. As used in [this act] P.L.2011, c.201 (C.34:1B-241.1 et seq.):

"Authority" means the New Jersey Economic Development Authority established by section 4 of P.L.1974, c.80 (C.34:1B-4).

“Department” means the Department of Agriculture established pursuant to R.S.4:1-1.

"Eligible farming operation" means two or more business entities that are engaged in farming operations in the State, that are applying together for participation in the loan program established pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill), and that, at the time of the application, are independently owned and operated, participate in an agricultural commodity or product marketing and development program operated by the Department of Agriculture, and satisfy other criteria that may be established by the authority pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill).

"Eligible small business" means a business entity that, at the time of application for participation in the small business loan program established pursuant to section 2 of P.L.2011, c.201 (C.34:1B-241.2), is independently owned and operated, operates primarily within this State, and which satisfies other criteria that may be established by the authority. "Eligible small business" shall include an eligible farming operation.

“Farm equipment” means equipment used directly for farming operations.

“Farming operations” mean any activities connected to the commercial growing, harvesting, processing, producing, or raising of agricultural products in the State, including crops, dairy animals, livestock, fur-bearing animals, poultry, bees, crops used in fermented alcoholic beverages and wine, and any products therefrom, including organic agricultural products; aquacultural products; horticultural products; and trees and forest products.

(cf: P.L.2011, c.201, s.1)

2. Section 2 of P.L.2011, c.201 (C.34:1B-241.2) is amended to read as follows:

2. a. The authority shall maintain and administer a small business loan program for the purpose of providing small business loans to eligible small businesses. The authority shall consult with the Department of Agriculture in administering the small business loan program as it applies to an eligible small business that is an eligible farming operation.

b. (1) Small business loans may be made to an eligible small business. The loan funds may be applied to any aspect of the business that supports its capital purchases, employee training, and salaries for new positions as determined by the authority.

(2) Loans made by the authority to an eligible farming operation may be applied to any aspect of the eligible farming operation that supports its farm equipment purchases as determined by the authority. Farm equipment purchased from loan funds made pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) shall be used by all of the business entities in the eligible farming operation.

(3) Two or more business entities engaged in farming operations in the State seeking to participate in the loan program established pursuant to subsection a. of this section shall submit a joint application in a form as the authority shall require and shall include information as the authority determines is necessary in consideration of a loan authorized pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill).

c. (1) In order to receive a small business loan, a business, at the time of application, shall provide proof that it is an eligible small business and shall enter into a small business loan agreement with the authority.

(2) In order to receive a loan from the authority pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill), a business entity engaged in farming operations in the State, at the time of application, shall provide proof, in a manner determined by the authority, that it and another business entity engaged in farming operations in the State that will also use the farm equipment, are an eligible farming operation.

d. The authority shall review and may approve applications for the loan program. The authority shall approve a completed joint application from applying business entities determined by the authority to be an eligible farming operation for the purposes of the loan program established pursuant to subsection a. of this section.

e. A business seeking to participate in the small business loan program shall submit an application in [such] a form as the authority shall require. [Such] The application shall include [such] information [as] the authority shall determine is necessary in consideration of the provisions of P.L.2011, c.123 (C.52:14B-21.1 et seq.).

f. Small business loans and loans to an eligible farming operation authorized under this section shall:

(1) be made pursuant to a small business loan agreement made pursuant to subsection c. of this section [and shall];

(2) bear interest at rates and terms deemed appropriate by the authority [,]; and

(3) contain other terms and conditions considered appropriate by the authority that are consistent with the purposes of P.L.2011, c.201 (C.34:1B-241.1 et seq.) and with rules and regulations [promulgated] adopted by the authority pursuant to [implement] section 3 of P.L.2011, c.201 (C.34:1B-241.3).

The provisions of a loan agreement with an eligible farming operation shall include, but need not be limited to, a statement of an eligible farming operation’s proportional shares of ownership, its farm equipment usage and maintenance responsibilities, and its loan repayment responsibilities for any loan proceeds received under the loan program.

g. The authority may, in its discretion, require an eligible small business that receives a small business loan under the program administered pursuant to P.L.2011, c.201 (C.34:1B-241.1 et seq.) to submit an audited financial statement to the authority in order to ensure the business's continued vitality. An audited financial statement from an eligible farming operation shall include all business entities in the eligible farming operation using the farm equipment.

h. The authority may, either through the adoption of rules and regulations, or through the terms of the small business loan agreement made pursuant to subsection c. of this section, establish terms governing the incidence of default by an eligible small business that receives a small business loan [under the program administered] pursuant to P.L.2011, c.201 (C.34:1B-241.1 et seq.).

i. In determining whether to provide a loan to an eligible small business, the authority shall consider, along with other criteria that the authority in its discretion deems appropriate, whether the business commits to increasing its full-time employment level in the State.

(cf: P.L.2011, c.201, s.2)

3. Section 3 of P.L.2011, c.201 (C.34:1B-241.3) is amended to read as follows:

3. The authority [may] shall adopt [such] rules and regulations, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), as [may be] are necessary to effectuate the purposes of P.L.2011, c.201 (C.34:1B-241.1 et seq.). The authority shall consult with the department concerning those rules and regulations applicable to small business loans made to eligible farming operations.

(cf: P.L.2011, c.201, s.3)

4. This act shall take effect immediately.

STATEMENT

This bill requires the New Jersey Economic Development Authority (EDA), in consultation with the Department of Agriculture, to provide loans to an eligible farming operation to purchase farm equipment under an existing small business loan program administered by the EDA. Farm equipment purchased with loan funds made available pursuant to the bill are to be used by all of the two or more business entities that constitute an eligible farming operation as defined in the bill.

The bill specifies that the business of farming comprises the commercial growing, harvesting, processing, producing, or raising of agricultural products in the State, including crops, dairy animals, livestock, fur-bearing animals, poultry, bees, crops used in fermented alcoholic beverages and wine, and any products therefrom; aquacultural products; horticultural products; and trees and forest products. Under the bill, an “eligible farming operation” is two or more business entities that are engaged in farming operations in the State, that are applying together for participation in the loan program established by the bill, and that, at the time of the application, are independently owned and operated, participate in an agricultural commodity or product marketing and development program operated by the Department of Agriculture, and satisfy other criteria that may be established by the EDA.

The bill requires that an EDA-approved loan to an eligible farming operation is to be made pursuant to a loan agreement, bear interest at rates and terms deemed appropriate by the EDA, and contain other terms and conditions considered appropriate by the EDA that are consistent with the purposes of the bill and with regulations adopted by the EDA to implement the bill. The EDA may, in its discretion, require an eligible farming operation that receives a loan under the program to submit a joint annual audited financial statement to the EDA in order to ensure the eligible farming operation’s continued viability and may, either through the adoption of regulations, or through the terms of the loan agreement, establish terms governing the incidence of default by an eligible farming operation that receives a loan under the program.