HBA-EVB S.B. 172 76(R)    BILL ANALYSIS


Office of House Bill AnalysisS.B. 172
By: Harris
Financial Institutions
4/16/1999
Engrossed



BACKGROUND AND PURPOSE 

Currently, investors in a qualified commercial loan, e.g., a loan over $3
million, may take an equity position in the company in which they are
investing without violating the Texas usury law.  S.B. 172 amends the
definition of a "qualified commercial loan" under Article 5069-1H.001,
Title 79, V.T.C.S., regarding consumer credit and consumer protection in
commercial transactions, by decreasing the commercial loan amount from $3
million to $250,000. 

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

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Subdivision (9), Article 5069-1H.001, Title 79,
V.T.C.S., by redefining a "qualified commercial loan" as follows:   

(A) 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 is entitled to borrow or receive funds or credit with an
aggregate value of $250,000 or more, rather than $3 million or more; or 

(B) a renewal or extension of a commercial loan described in Paragraph (A)
of this subdivision, whether or not, rather than whether, the principal
amount of the loan at the time of the, rather than its, renewal or
extension is $250,000 or more, rather than $3 million or more. Makes a
conforming change. 

(C) Prohibits a qualified commercial loan under $3 million from being
secured by real estate. 

SECTION 2.  Amends Article 5069-1H.101, Title 79, V.T.C.S., as follows: 

(b) Authorizes 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. 

(d)  Provides that the provisions of this article do not apply to a loan
made to a licensee of the Motor Vehicle Board of the Texas Department of
Transportation. 

SECTION 3. Emergency clause.
Effective date: upon passage.