The term "loan commodity" refers to specific agricultural products that can be pledged as collateral for loans. According to the law, this includes contract commodities, extra long staple cotton, and oilseed. These commodities are often used in agricultural financing to help farmers secure funds for their operations.
Loan commodities are primarily used in agricultural law and finance. They play a crucial role in securing loans for farmers and agricultural businesses. When a farmer borrows money, they may use these commodities as collateral, which provides lenders with a form of security. This concept is significant in agricultural finance and may involve various legal forms and procedures that users can manage with resources like US Legal Forms.
Here are a couple of examples of abatement:
For instance, a farmer may take out a loan to purchase new equipment and use their crop of extra long staple cotton as collateral. If they default on the loan, the lender can claim the cotton to recover their losses. (hypothetical example)
According to 7 USCS § 7202, the definition of loan commodity is established within the context of the Agricultural Market Transition Act. This statute outlines the specific commodities recognized as loan commodities.
| State | Loan Commodity Regulations |
|---|---|
| California | Specific regulations on cotton and oilseed collateral. |
| Texas | Focus on contract commodities and their valuation. |
This is not a complete list. State laws vary and users should consult local rules for specific guidance.
| Term | Definition | Difference |
|---|---|---|
| Collateral | Assets pledged to secure a loan. | Loan commodities are a specific type of collateral. |
| Contract Commodity | A commodity sold under a contract. | Loan commodities include contract commodities but also other agricultural products. |
If you are a farmer considering a loan, assess your eligible commodities to determine if they can be used as collateral. You can explore US Legal Forms for templates that help you navigate the loan process. If your situation is complex, it may be beneficial to consult with a legal professional.
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A loan commodity is an agricultural product that can be used as collateral for a loan, including contract commodities, extra long staple cotton, and oilseed.