By:  Harris                                                       S.B. No. 417


A BILL TO BE ENTITLED

AN ACT

relating to interest rate ceilings on certain commercial loans.               
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Section 306.001, Finance Code, is amended by 
adding Subdivision (5-a) and amending Subdivision (9) to read as 
follows:
		(5-a)  "Exempt qualified commercial loan":                             
			(A)  means:                                                           
				(i)  a commercial loan in which one or more 
persons as part of the same transaction lends, advances, borrows, 
or receives, or is obligated to lend or advance or entitled to 
borrow or receive, money or credit with an aggregate value of:
					(a)  $7 million or more if the 
commercial loan is secured by real property; or
					(b)  $250,000 or more if the commercial 
loan is not secured by real property and, if the aggregate value of 
the commercial loan is less than $500,000, the loan documents 
contain a written certification from the borrower that:
						(1)  the borrower has been 
advised by the lender to seek the advice of an attorney and an 
accountant in connection with the commercial loan; and
						(2)  the borrower has had the 
opportunity to seek the advice of an attorney and accountant of the 
borrower's choice in connection with the commercial loan; and
				(ii)  a renewal or extension of a commercial 
loan described by this paragraph, regardless of the principal 
amount of the loan at the time of the renewal or extension; and
			(B)  does not include a commercial loan made for 
the purpose of financing a business licensed by the Motor Vehicle 
Board of the Texas Department of Transportation under Section 
2301.251(a), Occupations Code.
		(9)  "Qualified commercial loan":                                             
			(A)  means:                                                                  
				(i)  a commercial loan secured by real 
property in which one or more persons as part of the same 
transaction lends, advances, borrows, or receives, or is obligated 
to lend or advance or entitled to borrow or receive, money or credit 
with an aggregate value of[:
					[(a)]  $3 million or more but less than 
$7 million [if the commercial loan is secured by real property; or
					[(b)  $250,000 or more if the 
commercial loan is not secured by real property and, if the 
aggregate value of the commercial loan is less than $500,000, the 
loan documents contain a written certification from the borrower 
that:
						[(1)  the borrower has been 
advised by the lender to seek the advice of an attorney and an 
accountant in connection with the commercial loan; and
						[(2)  the borrower has had the 
opportunity to seek the advice of an attorney and accountant of the 
borrower's choice in connection with the commercial loan]; and
				(ii)  a renewal or extension of a commercial 
loan described by this paragraph [Paragraph (A)], regardless of the 
principal amount of the loan at the time of the renewal or 
extension; and
			(B)  does not include a commercial loan made for 
the purpose of financing a business licensed by the Motor Vehicle 
Board of the Texas Department of Transportation under Section 
2301.251(a), Occupations Code [4.01(a), Texas Motor Vehicle 
Commission Code (Article 4413(36), Vernon's Texas Civil 
Statutes)].
	SECTION 2.  Subsection (a), Section 306.002, Finance Code, 
is amended to read as follows:
	(a)  Except as provided by Section 306.1015, a [A] creditor 
may contract for, charge, and receive from an obligor on a 
commercial loan a rate or amount of interest that does not exceed 
the applicable ceilings computed in accordance with Chapter 303.
	SECTION 3.  Subchapter B, Chapter 306, Finance Code, is 
amended by adding Section 306.1015 to read as follows:
	Sec. 306.1015.  EXEMPT QUALIFIED COMMERCIAL LOAN--RATE 
CEILINGS INAPPLICABLE.  (a)  The parties to an exempt qualified 
commercial loan agreement may contract for, charge, and receive any 
rate or amount of interest to which the parties agree, however 
computed.
	(b)  A rate ceiling provided by this title or another law of 
this state does not apply to an exempt qualified commercial loan.
	SECTION 4.  This Act takes effect January 1, 2004, but only 
if the constitutional amendment authorizing the legislature to 
define rates of interest for commercial loans is approved by the 
voters.  If that amendment is not approved by the voters, this Act 
has no effect.