§205.  Types of loans; security

A.  Corporations organized under this Chapter shall only make loans to and contract for advances with its members or to other persons whose loans are beneficial to members and are guaranteed by members in whole or in part.  Loans shall be secured by pledge of shares of the corporation having a total valuation, based on par value of the shares, of not less than ten percent of the amount of the loan.  No loan to any one borrower shall be in excess of twenty percent of the capital stock subscribed and paid in.

B.  Loans made by such corporations shall be classified as current loans, and continuing credit loans, and only such loans shall be made.

C.(1)  Current loans are those made for any one or more of the purposes for which the corporation is formed, definitely terminating within the current year of the loan, or within a period of time not less than six months nor more than three years from date of the loan.

(2)  Current loans shall be secured by a pledge of the capital stock of the corporation, and may be additionally secured by: a security interest affecting crops, livestock, work animals, and agricultural implements; a mortgage on real estate; and by such other collateral security as the board of directors of the corporation may require.

D.  Continuing credit loans are those made to the borrower for his successive agricultural operations over a period of time not exceeding ten years, on a specifically described farm, of a stated sum of money designated as the "maximum", and secured by a pledge of capital stock of the corporation and any one or all of the following:

(1)  A mortgage of the farm.

(2)  A security interest affecting crops, those presently planted and growing as well as all successive crops to be planted, grown, cultivated, and harvested thereon during the entire period of time, as fixed in the loan.

(3)  A security interest affecting all livestock and work animals and agricultural implements belonging to borrower and located on the farm at the beginning of the loan.

(4)  A security interest affecting such other collateral security as the corporation may require and accept.

Acts 1989, No. 137, §2, eff. Sept. 1, 1989; Acts 1991, No. 539, §1, eff. Jan. 1, 1992.