EM loans must comply with the general limitations established at § 764.102.

EM loans may not exceed the lesser of:

The amount of credit necessary to restore the farming operation to its pre-disaster condition;

In the case of a physical loss loan, the total eligible physical losses caused by the disaster; or

In the case of a production loss loan, 100 percent of the total actual production loss sustained by the applicant as calculated in paragraph (c) of this section.

For production loss loans, the applicant's actual crop production loss will be calculated as follows:

Subtract the disaster yield from the normal yield to determine the per acre production loss;

Multiply the per acre production loss by the number of acres of the farming operation devoted to the crop to determine the volume of the production loss;

Multiply the volume of the production loss by the market price for such crop as determined by the Agency to determine the dollar value for the production loss; and

Subtract any other disaster related compensation or insurance indemnities received or to be received by the applicant for the production loss.

For a physical loss loan, the applicant's total eligible physical losses will be calculated as follows:

Add the allowable costs associated with replacing or repairing chattel covered by hazard insurance (excluding labor, machinery, equipment, or materials contributed by the applicant to repair or replace chattel);

Add the allowable costs associated with repairing or replacing real estate, covered by hazard insurance;

Add the value of replacement livestock and livestock products for which the applicant provided:

Written documentation of inventory on hand immediately preceding the loss;

Records of livestock product sales sufficient to allow the Agency to establish a value;

Add the allowable costs to restore perennials to the stage of development the damaged perennials had obtained prior to the disaster;

Add, in the case of an individual applicant, the allowable costs associated with repairing or replacing household contents, not to exceed $20,000; and

Subtract any other disaster related compensation or insurance indemnities received or to be received by the applicant for the loss or damage to the chattel or real estate.

EM loan funds may not be used for physical loss purposes unless:

The physical property was covered by general hazard insurance at the time that the damage caused by the natural disaster occurred. The level of the coverage in effect at the time of the disaster must have been the tax or cost depreciated value, whichever is less. Chattel property must have been covered at the tax or cost depreciated value, whichever is less, when such insurance was readily available and the benefit of the coverage was greater than the cost of the insurance; or

The loan is to a poultry farmer to cover the loss of a chicken house for which the applicant did not have hazard insurance at the time of the loss and the applicant:

Applied for, but was unable to obtain hazard insurance for the chicken house;

Uses the loan to rebuild the chicken house in accordance with industry standards in effect on the date the applicant submits an application for the loan;

Obtains, for the term of the loan, hazard insurance for the full market value of the chicken house; and

Meets all other requirements for the loan.

EM loan funds may not be used to refinance consumer debt, such as automobile loans, or credit card debt unless such credit card debt is directly attributable to the farming operation.

Losses associated with horses used for racing, showing, recreation, or pleasure or loss of income derived from racing, showing, recreation, boarding, or pleasure are not considered qualified losses under this section.