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§ 6040-6. Loans by financial institutions

Purdon's Pennsylvania Statutes and Consolidated StatutesTitle 7 P.S. Banks and Banking

Purdon's Pennsylvania Statutes and Consolidated Statutes
Title 7 P.S. Banks and Banking (Refs & Annos)
Miscellaneous Laws
Chapter 51C. Business Development Credit Corporations (Refs & Annos)
7 P.S. § 6040-6
§ 6040-6. Loans by financial institutions
Currentness
(1) Any financial institution is hereby empowered to make a lending agreement with a corporation. Notwithstanding the provisions of any other law, the notes or other interest-bearing obligations of a corporation, issued in accordance with and by virtue of this act and the by-laws of a corporation, shall be proper investments for the financial institutions which become parties to a lending agreement, up to, but in no event exceeding, the loan limits established hereinafter.
(2) The financial institution, which is a party to a lending agreement, shall lend funds to a corporation as and when called upon by it to do so, but, except as hereinafter provided in subsection (3) of this section 6, the total amount on loan by any such financial institution to a corporation at any one time shall not exceed the following limit to be determined as of the effective date of the lending agreement. Moreover, such amount shall thereafter be readjusted, annually, in the event of any change in the base of the loan limit of such financial institution, which is as follows:
(a) National banking association, State-chartered bank, bank and trust company, savings bank, private bank or credit union, four per centum of capital and surplus, and the aggregate amount on loan to all such corporations shall not exceed twelve per centum of capital and surplus.
(b) Federal savings and loan association or building and loan association, four per centum of its undivided profits and general reserve funds, and the aggregate amount on loan to all such corporations shall not exceed twelve per centum of its undivided profits and general reserve funds.
(c) Stock insurance company, four per centum of capital and surplus, and the aggregate amount on loan to all such corporations shall not exceed twelve per centum of capital and surplus.
(d) Surety and casualty company, four per centum of capital and surplus, and the aggregate amount on loan to all such corporations shall not exceed twelve per centum of capital and surplus.
(e) Mutual insurance company, four per centum of guaranty funds or of surplus, whichever is applicable, and the aggregate amount on loan to all such corporations shall not exceed twelve per centum of such guaranty funds or surplus, and
(f) Comparable limits for other financial institutions as established by the board of directors of a corporation, subject to the approval of the Department of Banking. The total amount on loan to a corporation by any financial institution which is a party to a lending agreement shall not exceed, at any one time, one million one hundred thousand dollars ($1,100,000). All loan limits shall be established at the thousand dollars nearest to the amount computed on an actual basis. All calls of funds which such financial institutions are committed to lend to a corporation shall be prorated by a corporation among the financial institutions which are parties to its lending agreement in the same proportion that the lending agreement commitment of each bears to the aggregate lending agreement commitments of all financial institutions of a corporation. Upon six months prior written notice to the board of directors of a corporation, any financial institution may withdraw from and terminate the lending agreement effective at the end of such six month period and after the effective date of withdrawal such financial institution shall be free of obligation hereunder, except those accrued or committed by the corporation prior to the effective date of withdrawal.
(g) At no time shall the total obligations of any such corporation exceed twenty times the amount of its paid-in capital and surplus.
(3) Any financial institution named in clause (a) of subsection (2) of this section 6 may lend funds on a temporary basis to a corporation with which it has entered into a lending agreement, but the aggregate amount which such corporation is authorized to borrow pursuant to the provisions of this subsection (3) shall at no time exceed the sum of the balance at the time available to be borrowed by the corporation from all financial institutions which are parties to its lending agreement and the amount at the time available to be borrowed by the corporation from other sources, and each note evidencing such loan shall mature not more than one year from the date thereof.

Credits

1959, Dec. 1, P.L. 1647, § 6. Amended 1963, Aug. 14, P.L. 830, § 1; 1965, July 2, P.L. 171, § 1.
7 P.S. § 6040-6, PA ST 7 P.S. § 6040-6
Current through Act 10 of the 2024 Regular Session. Some statute sections may be more current, see credits for details.
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