SRC-JBJ C.S.S.B. 172 76(R)BILL ANALYSIS


Senate Research CenterC.S.S.B. 172
76R3629 WP-DBy: Harris
Economic Development
3/16/1999
Committee Report (Substituted)


DIGEST 

Currently, investors on a qualified commercial loan, e.g., a loan over
$3,000,000, may take an equity position in the company in which they are
investing without violating the Texas usury law.  C.S.S.B. 172 amends the
definition of a "qualified commercial loan" under Title 79, V.T.C.S.,
regarding consumer credit  and consumer protection in commercial
transactions, by decreasing the commercial loan amount from $3,000,000 to
$1,000,000. 

PURPOSE

As proposed, C.S.S.B. 172 redefines the minimum amounts of a "qualified
commercial loan." 

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Subdivision (9), Article 5069-1H.001, Title 79,
V.T.C.S., to redefine a "qualified commercial loan" including resetting the
loan value to $250,000, rather than $3 million; prohibiting a qualified
loan under $3 million from being secured by real estate; and providing that
the provisions of article 1H.001 are not applicable to a loan made to a
licensee of the Texas Motor Vehicle Board. 

SECTION 2.  Amends Subsection (b), Article 5069-1H.101, V.T.C.S., to
authorize the parties to contract for the additional charge of an option or
other right to participate in or own a share of certain appreciations in
value or profits. 

SECTION 3.  (a)  Effective date:  September 1, 1999, except as provided by
Subsections (b) and (c). 

(b) Provides that SECTION 1 of this Act will take effect only if
nonsubstantive additions to and corrections in enacted codes do not take
effect. 

(c)  Provides that SECTION 2 of this Act takes effect only if
nonsubstantive additions to and corrections in enacted codes do not take
effect. 

SECTION 4.Emergency clause.

SUMMARY OF COMMITTEE CHANGES

SECTION 1.

Amends Subdivision (9), Article 5069-1H.001, V.T.C.S., to redefine a
"qualified commercial loan," including resetting the loan value to $250,000
rather than $3 million; prohibiting a qualified loan under $3 million from
being secured by real estate; and providing that the provisions of Article
1H.001 are not applicable to a loan made to a licensee of the Texas Motor
Vehicle Board.