Section 3 AAC 80.055 - Lending practices(a) If the balance of the commercial fishing revolving loan fund is not adequate to meet the anticipated loan demand for the remainder of the fiscal year, the department will process loan applications in the following order according to the purpose of the loan: (1) first, the purchase of limited entry permits;(2) second, satisfaction of federal tax obligations;(3) third, vessel upgrade or purchase;(4) fourth, the purchase of gear;(5) fifth, the purchase of fishing quota shares;(6) sixth, refinancing as permitted under AS 16.10.310(a)(11).(b) An applicant will be considered eligible for a loan to purchase a limited entry permit, vessel, or gear under AS 16.10.310(a)(1)(B) or purchase quota shares under AS 16.10.310(a)(1)(C) if the department determines that the applicant is not eligible for an alternative source of financing. An applicant's ability to provide a guarantor for a loan does not make the applicant ineligible for a loan under AS 16.10.310(a)(1)(B) or (a)(1)(C).(c) A loan will not be approved if its primary purpose would be to(1) speculate in the acquisition and sale of limited entry permits, quota shares, vessels, or gear;(2) lease out a limited entry permit; or(3) purchase a commercial fishing vessel, gear, a limited entry permit, or quota shares that will not be put to use in the fishing season immediately following the loan approval date.(d) Except as provided in AS 16.10.310(a)(10) and (11), a loan will not be approved for refinancing long-term debt. Interim or construction financing is not considered long-term debt if the term is 24 months or less and the promissory note or the original agreement was executed less than 12 months before receipt of the application by the department, except that the department may waive these restrictions if (1) the applicant shows that the application of these restrictions would result in undue hardship for the applicant;(2) the applicant is a good financial risk; and(3) the state's investment is preserved.(e) In determining the maximum loan amount that may be approved for the purchase of a limited entry permit, the department will rely on the value established by the Alaska Commercial Fisheries Entry Commission or other appropriate sources as determined by the department.(h) A loan for the purchase of a vessel for use in a limited entry fishery will not be approved unless the applicant has access to a limited entry permit for that fishery and the primary use of the vessel will be commercial fishing by the borrower.(i) A vessel that is being purchased under this chapter cannot be leased unless the vessel is primarily used by the borrower for commercial fishing. All lease agreements must have prior approval by the department.(j) Except as provided in AS 16.10.310(a)(11), loan proceeds may not be used to reimburse an applicant for expenses paid more than one year before receipt of the application by the department. The department may waive this restriction if(1) the applicant shows that the application of this restriction would result in undue hardship for the applicant;(2) the applicant is a good financial risk; and(3) the state's investment is preserved.(k) The department will quarterly set the interest rate for loans under 3 AAC 80.010 - 3 AAC 80.180 on the first day of each calendar quarter. The interest rate set for a quarter remains in effect until the department changes the rate, will not exceed the maximum or minimum interest allowed under AS 16.10.320(a)(2), and will be established at the nearest one-quarter point, before any credits are applied by the department. The interest rate will be based on the bank prime rate, as defined in AS 44.88.599, during the previous quarter as follows:(1) the interest rate is based on the cost of funds to the state as defined in AS 16.10.320(m) for loans made (A) to upgrade existing vessels and gear for the purpose of improving the quality of Alaska seafood products; or(B) for engine efficiency upgrades;(2) for all other loans under 3 AAC 80.010 - 3 AAC 80.180, the interest rate is based on the bank prime rate plus two percentage points.(l) The interest rate for a loan is the quarterly interest rate in effect at the time the loan commitment is made. The interest rate for a loan will be at a fixed rate for the term of the loan.(n) If refinancing funds are limited, the department will process refinancing requests in the following order:(1) first, applicants who have existing loans made under AS 16.10.300-16.10.370;(2) second, applicants who are under-collateralized on their existing loan, but who would meet the collateral requirements of AS 16.10.310-16.10.370 by the addition of a limited entry permit;(3) third, applicants who could significantly improve their loan terms by receiving a loan under AS 16.10.310(a)(11);(4) fourth, applicants in default on their existing loan who otherwise meet the requirements of AS 16.10.310-16.10.370.(o) To be eligible for a lower interest loan under (k) of this section for(1) an upgrade to an existing vessel or gear for the purpose of improving the quality of Alaska seafood products, an applicant must establish to the satisfaction of the department that the upgrade to be financed with the loan will enhance product quality; types of acceptable upgrades include refrigeration, hold insulation, and slider reels;(2) an engine efficiency upgrade or replacement, an applicant must establish to the satisfaction of the department that the upgrade or replacement to be financed with the loan will reduce emissions or improve fuel productivity.(p) Beginning July 30, 2000, the department will grant a credit on an existing loan with payments due annually if, before the late fee date as described in 3 AAC 80.075(c), the borrower paid in full the amount due for the current calendar year. Beginning July 30, 2000, the department will grant a credit on an existing loan with payments due monthly, quarterly, or semi-annually if, for each payment due within a 12-month period, the borrower paid in full the amount due before the late fee date for that payment as described in 3 AAC 80.075(c). The amount due includes principal, interest due, deferred interest due, fees, costs, and other accounts receivable due. If the department grants a credit under this subsection, the department will apply that credit beginning from the late fee date, as described in 3 AAC 80.075(c), for the payment that qualified the borrower for the credit. Every 12 months after that date, the department will review the borrower's loan payment history, and will discontinue a credit granted under this subsection if during that 12-month period the borrower failed to make in full a payment due by the late fee date for that payment as described in 3 AAC 80.075(c). The maximum credit that will be granted under this subsection is one percentage point of the annual interest rate.Eff. 9/11/85, Register 95; am 5/23/88, Register 106; am 11/28/92, Register 124; am 3/16/95, Register 133; am 8/10/97, Register 143; am 10/17/98, Register 148; am 7/30/2000, Register 155; am 9/27/2008, Register 187; am 3/28/2009, Register 189; am 10/16/2012, Register 204Authority:AS 16.10.310
AS 16.10.320
AS 16.10.325
AS 16.10.339