HBA-EVB C.S.S.B. 172 76(R)BILL ANALYSIS Office of House Bill AnalysisC.S.S.B. 172 By: Harris Financial Institutions 5/10/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE Currently, a "qualified commercial loan" means a commercial loan in the original principal amount of $3 million or more, or a renewal or extension of a commercial loan in the original principal amount of $3 million or more, whether the principal amount of the loan at the time of its renewal or extension is $3 million or more. C.S.S.B. 172 redefines a "qualified commercial loan" under Article 5069-1H.001, Title 79, V.T.C.S., and Section 306.001, Finance Code, to mean 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 $3 million or more if the commercial loan is secured by real property; or $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 contains certain information relating to the advice of an attorney and an accountant of the borrower's choice in connection with the 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 Article 5069-1H.001(9), V.T.C.S., by redefining a "qualified commercial loan" and providing that a qualified commercial loan 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 4.01(a), Article 4413(36), V.T.C.S. (Texas Motor Vehicle Commission Code) SECTION 2. Amends Section 306.001(9), Finance Code, by redefining a "qualified commercial loan" and providing that a qualified commercial loan 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 4.01(a), Article 4413(36), V.T.C.S. (Texas Motor Vehicle Commission Code) SECTION 3. Provides that SECTION 1 takes effect upon passage. Provides that SECTION 2 of this Act takes effect and SECTION 1 of this Act is repealed September 1, 1999, only if the Act of the 76th Legislature, Regular Session, 1999, relating to nonsubstantive additions to and corrections in enacted codes takes effect. SECTION 4. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute differs from the original in SECTION 1 (Article 5069-1H.001(9), V.T.C.S.), by redefining a "qualified commercial loan" as 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, rather than funds, or credit with an aggregate value of $3 million, rather than $250,000, or more if the commercial loan is secured by real property. The substitute differs from the original by redefining further a "qualified commercial loan" to mean 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 $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 the borrower has been advised by the lender to seek certain advice of an attorney and an accountant; and the borrower has had the opportunity to seek such advice of an attorney and accountant of the borrower's choice in connection with the commercial loan. Provides that a "qualified commercial loan" 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 4.01(a), Article 4413(36), V.T.C.S. (Texas Motor Vehicle Commission Code). This subject was addressed in proposed Subsection (d), Article 1H.001, in SECTION 2 of the original. Makes conforming and nonsubstantive changes. The original bill defined a "qualified commercial loan" as: (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, rather than the original principal amount, of $250,000, rather than $3 million or more; or (B) a renewal or extension of a commercial loan described in Paragraph (A) of this subdivision, rather than in the original principal amount of $3 million or more, whether or not the principal amount of the loan at the time of the, rather than its, renewal or extension is $250,000, rather than $3 million, or more. (C) Prohibits a qualified commercial loan under $3 million from being secured by real estate. Paragraph (B) of the original is redesignated as Subparagraph (A)(ii) of the substitute, and relates to a renewal or extension of a commercial loan described by Paragraph (A), rather than in the amount of $3 million or more, regardless of the principal amount of the loan at the time of the renewal or extension, rather than whether or not the principal amount at the time of its renewal or extension is $250,000 or more. Makes conforming and nonsubstantive changes. The substitute differs from the original by removing proposed Paragraph (C) of the original which prohibited a qualified commercial loan under $3 million from being secured by real estate. The substitute differs from the original by removing SECTION 2 of the original (Subsection (b) and proposed Subsection (d), Article 5069-1H.101, V.T.C.S.), which authorized the parties to contract for additional charges related to certain appreciations in value, and set forth 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. The substitute also differs from the original by adding a new SECTION 2 (Section 306.001(9), Finance Code), by redefining a "qualified commercial loan." Provides that a "qualified commercial loan" 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 4.01(a), Article 4413(36), V.T.C.S. (Texas Motor Vehicle Commission Code). Makes conforming and nonsubstantive changes. The substitute differs from the original by adding a new SECTION 3 to provide that SECTION 1 of this Act takes effect immediately upon passage, and that SECTION 2 of this Act takes effect and SECTION 1 of this Act is repealed September 1, 1999, only if the Act of the 76th Legislature, Regular Session, 1999, relating to nonsubstantive additions to and corrections in enacted codes takes effect. The substitute differs from the original by replacing the long emergency clause in SECTION 3 of the original with the modified long emergency clause in SECTION 4 of the substitute.