When used in these rules, unless the context clearly requires a different meaning:

(1)  The "Act" means the Montana Agricultural Loan Authority Act, created by S.B. 316, (1983)  , and codified in Title 80, chapter 12, MCA.

(2)  "Agricultural improvements" means any improvements, buildings, structure or fixtures suitable for use in farming/ranching which are located on agricultural land and may include an existing dwelling for residence.

(3)  "Agricultural land", as defined in 80-12-102, MCA, means land actively devoted to agricultural use as defined in 15-7-202, MCA.  

(4)  "Application" means a completed instrument on a form approved by the authority.   Each application must include the following:   beginning farmer/rancher name, address, financial data, description of anticipated use of loan proceeds, amount of loan, cost or purchase price of the item financed (including the interest rate and collateral or other security required)  , statement of beginning farmer's/rancher's net worth determined in accordance with authority rules, a summary of proposed loan terms and certain certifications of the beginning farmer/rancher and financial institution.

(5)  The "authority" means the department of agriculture provided for in 2-15-3001, MCA.

(6)  "Beginning farmer/rancher" means an individual who meets all qualifications required under 80-12-203(1)  and (2)  , MCA.

(7)  The "department" means the Montana department of agriculture.

(8)  "Depreciable agricultural property" means personal property suitable for use in farming/ranching for which an income tax deduction for depreciation is allowable in computing federal income tax and which is located on agricultural land.

(9)  "Farming/ranching" means the cultivation of land for the production of agricultural crops, the raising of poultry, the production of eggs, the production of milk, the production of fruit or other horticultural crops, grazing or the production of livestock or the production of timber, or sod or other agricultural enterprises on agricultural land.   Farming/ranching shall not include spraying, harvesting, or providing other farm/ranch services on contract.

(10)  "Financial institution or bond purchaser" means any bank, bank holding company, trust company, mortgage company, national banking association, savings and loan association, credit union, life insurance company, any state or federal government agency or instrumentality, any other entity authorized to make mortgage loans or secured loans in this state or any person that obtains an authority bond under the program in connection with a contract sale or loan to a beginning farmer/rancher.

(11)  "Loan agreement" means a loan agreement, financing agreement, installment purchase agreement or any other agreement entered into by the authority with the beginning farmer/rancher or financial institution in connection with the issuance of the authority's bond under this program.

(12)  "Net worth" means total assets minus total liabilities as determined by the financial institution, in accordance with rules of the authority and generally accepted accounting procedures.

(13)  "Total assets" means assets including, but not limited to the following:   cash and deposits in financial institutions etc.; cash crops or feed on hand; livestock held for sale; breeding stock; marketable bonds and securities; securities (not readily marketable)  ; accounts receivable; notes receivable; cash invested in growing crops; net cash value of life insurance; machinery and equipment, cars and trucks; farm and other real estate including life estates, personal residence and summer homes; value of beneficial interest in a trust, government payments or grants; any other assets.

(a)  Total assets shall not include items used for personal, family or household purposes by the applicant, but in no event shall such property be excluded to the extent a deduction for depreciation is allowable for federal income tax purposes.   All assets shall be valued at fair market value by the financial institution.   Such value shall be what a willing buyer would pay a willing seller in the locality.   A deduction of 10% may be made from fair market value of farm and other real estate.

(14)  "Total liabilities" means liabilities including, but not limited to the following:   accounts payable; notes or other indebtedness owed to any source; taxes; rent; leases; amount owed on real estate contracts or real estate mortgages; judgements; accrued interest payable; and other liabilities.   Contingent liabilities cannot be included in the computation of total liabilities, but all such contingent liabilities shall be disclosed.