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.