By: Harris S.B. No. 417
(In the Senate - Filed February 10, 2003; February 17, 2003,
read first time and referred to Committee on Business and Commerce;
March 12, 2003, reported adversely, with favorable Committee
Substitute by the following vote: Yeas 9, Nays 0; March 12, 2003,
sent to printer.)
COMMITTEE SUBSTITUTE FOR S.B. No. 417 By: Williams
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.
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