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InfoSight Highlight: Newly Updated! Member Business Lending
Thursday, December 22, 2016 6:40 AM

Any loan, line of credit, letter of credit (including any unfunded commitments), and any interest a credit union obtains in such loans made by another lender to individuals, sole proprietorships, partnerships, corporations, or other business enterprises for commercial, industrial, agricultural, or professional purposes (not for personal expenditures) is considered a commercial loan under NCUA rules.

There are certain loans that are excluded from the commercial loan definition.

  • Loans secured by a lien on a one-four family residential property (whether or not it is the borrower’s primary residence);
  • Loans fully secured by credit union shares or other financial institution deposits;
  • Loans secured by a vehicle manufactured for household use;
  • Loans that would otherwise meet the definition, but when aggregated (outstanding balances plus unfunded commitments), less any portion secured by shares in a credit union to a borrower or associated borrower, equal less than $50,000; and
  • Loans made by a federally insured credit union to another federally insured credit union and to credit union service organizations (CUSOs).

member business loan means any commercial loan, except that the following commercial loans are not considered member business loans and are not counted towards the aggregate limit:

  • Any loan in which a federal or state agency fully insures repayment, fully guarantees repayment, or provides an advance committee to purchase the loan in full; and
  • Any non-member commercial loan or non-member participation interest in a commercial loan made by another lender, provided the credit union acquired the non-member loans and participation interests in compliance with all relevant laws and regulations.

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